Players up and down the electronics supply chain have been scrambling since the announcement of a list of Chinese goods that would be hit by a 25% tariff. The complete list of goods is valued at $34 billion and includes 818 categories of products. Electronics components account for 58 of the categories with new tariffs. An analysis of data published by the U.S. Census Bureau: Economic Indicators Division reveals that the value of these electronics goods in 2017 exceeded $5 billion, and had grown by 6.6% from $4.7 billion in 2016.
The detailed categories of electronics goods can be reasonably grouped into 10 categories. As shown in Fig. 1, three categories account for more than 50% of the value in new tariffs on electronics from China: Insulated Wiring and Fiber Optic Cables; Transistors, LEDs, and Optical Couplers; and Electrical Connectors.
The Office of the U.S. Trade Representative said the new tariffs would target industrial goods, particularly in areas identified under China’s “Made in China 2025” plan designed to encourage growth in particular industries. “It generally focuses on products from industrial sectors that contribute to or benefit from the ‘Made in China 2025’ industrial policy, which include industries such as aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles,” the office said. “The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions.”
The focus of these punitive tariffs puts electronic components squarely in the bullseye, and as a result this segment of the market accounts for roughly 15% of the value of goods hit by tariffs.
A potential second wave of tariffs has already been identified in what is called “List 2.” If this round is implemented, electronic components would be an even larger contributor to the total value in tariffed goods. This second list includes 284 goods worth another $16 billion. Even though electronics components only have 17 categories on this second list, the total value of these categories is greater than $4.3 billion, or exceeding 27% of the total value to be hit by tariffs.
Semiconductor products would be most heavily taxed in this second group of electronics products, with nearly 63% of the value coming from processors, memory ICs, and other ICs. The impact of this phase of tariffs is shown in Fig. 2.
Figure 1: Share of Electronics Components Revenue Impacted by China Import Tariffs (2017 Value)
Figure 2: Share of Electronics Components Revenue Impacted by Potential China Import Tariffs (2017 Value)
Details Divulged for Value of Goods from China with New Tariffs
The categories of goods to be tariffed has been identified using the subcategories under the Harmonized Commodity Description and Coding Systems, or HS—a coding system that helps to standardize the classification of goods around the world. The USITC (Office of Tariff Affairs and Trade Agreements) is responsible for publishing the Harmonized Tariff Schedule of the United States Annotated (HTSA). The HTSA provides the applicable tariff rates and statistical categories for all merchandise imported into the United States.
Using these codes and applying them to the import data published by the Census Bureau, the value of electronics goods has been extracted and summarized in Tables 1 and 2. These tables present historical data on imports from China for 2016, 2017, and 2018 (through August).
The value of half of the products in Table 1 grew by double digits between 2016 and 2017 with “Terminals, Distribution and Junction Boxes” leaping by over 47%. On the other hand, the value of Piezoelectric Crystal imports from China collapsed by nearly 31%. The value of IC imports from China leapt by over 23% between 2016 and 2017 as shown in Table 2. The data indicates strong growth in the value of IC imports from China continues in 2018. However, the value of solar panel imports has completely collapsed from $1.5 billion in 2016 to only $18 million through August 2018.
For those interested in the details of products included in List 1 and List 2 of tariffs on imported electronics goods from China, this information is presented in Tables 3 and 4.
Table 1: Value of China Import Revenues to U.S. for List 1 Tariffs on Electronic Components (Millions of $U.S.)
Table 2 –Value of China Import Revenues to U.S. for List 2 Tariffs on Electronic Components (Millions of $U.S.)
Table 3: List 1 of Electronic Parts with 25% Tariff Imposed on China Imports
Table 4 – List 2 of Electronic Parts with Potential 25% Tariff
Imposed on China Imports