US tariffs on GPUs and motherboards could return in January

US tariffs on GPUs and motherboards could return in January

Trump-era tariffs on Chinese-made PC parts, including graphics cards, will return in January unless the Biden administration acts. Otherwise, be prepared for price increases.

In March, the White House granted exclusions on Trump-era tariffs, which previously imposed a 25% duty on many Chinese-made electronics, such as motherboards and desktop enclosures. This decision helped restore some normality to prices in the electronics market in a context of high inflation in the United States. But these exclusions were only temporary and are due to expire on December 31.

The impending expiration date has led industry groups to urge the Office of the U.S. Trade Representative (USTR) to extend the exclusions or remove the Trump-era tariffs altogether. Americans for Free Trade even warned that companies are already planning price hikes due to the Biden administration’s inaction.

“Because U.S. companies must make supply chain and procurement decisions months in advance, the uncertainty created by the USTR’s inaction is forcing our companies to incorporate price increases of 25% in product lines that may soon be Section 301-free,” the group said.(Opens in a new window) the USTR in October.

The Consumer Technology Association (CTA), which counts AMD, Nvidia and HP among its members, also lobbied the USTR to make a quick decision on extending the price exclusions.

“We have made it clear that the tariffs have not benefited our industry,” said Ed Brzytwa, vice president of international trade for the CTA, who described the tariffs as a tax on American consumers and businesses.

In July, CTA published(Opens in a new window) a report, which claimed that Trump-era tariffs had failed to spur job creation or investment in U.S. manufacturing. Instead, some companies have decided to move their production to other places like Vietnam, Taiwan or Mexico. But many have kept their manufacture in China.

“So the tariffs, from our point of view, no longer motivate companies to leave China,” Brzytwa said. “Because the companies said I would rather pay the tariff and have the certainty of working with the supplier we’ve been working with for decades, than change my supply chain and take the risk of moving to another market. , especially during a pandemic.”

So far, the USTR has been silent on extending exclusions for PC parts made in China. “I have no updates to share at this time regarding these exclusions,” a spokesperson for the office said. But last month, the agency extended(Opens in a new window) exclusions for “COVID-related products,” but only for an additional three months.

In addition, the USTR conducts(Opens in a new window) a four-year review of the effectiveness of Trump-era tariffs in ending China’s unfair trade practices. This includes determining whether the United States should change its approach to imposing tariffs. But it’s still unclear when the USTR will make a major tariff decision, or just one.

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Brzytwa declined to comment on how returning tariffs might affect a company’s business plans. However, he said: “Uncertainty surrounding decision-making [from USTR] is really detrimental to commercial interests and ultimately means higher costs for consumers.

Abolition of Trump-era tariffs could help the Biden administration tackle lingering inflation problems facing the U.S. economy. But there are indications that US Trade Representative Katherine Tai wants to keep the tariffs in place. In June she said(Opens in a new window) a congressional subcommittee, she sees the tariffs as “an important lever” in the United States’ trade relationship with China. “And a trader never gives up leverage,” she said.

Nvidia, AMD and Intel did not respond to a request for comment. But a year ago, Nvidia told the USTR it still relied on Chinese manufacturing to produce graphics cards. “Efforts to build new capabilities in countries that do not currently manufacture such products (such as the United States and Vietnam) have failed and have been severely hampered by the fallout from COVID-19,” the company wrote.

Meanwhile, GPU supplier Zotac told the USTR, “China remains…the industry’s leading manufacturing base for video graphics cards and personal computers.” The main reason is due to the fact that the upstream supply chain remains mainly in China.

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