New U.S. Tariffs May Increase Cellular M2M Hardware Prices by 25%

Starting last week on July 6th anyone in America importing Chinese electronic components (including wireless devices and components) may experience a 25% price increase. The jump in cost comes from a new U.S. import tariff covering some common electronic parts.

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The tariff is a result of the White House’s position on international trade. Particularly its opinion that trade balances between countries need to be closer to even. In 2017 the trade deficit between China and the US was -$375 billion (https://www.census.gov/foreign-trade/balance/c5700.html).

With Hologram having the largest global coverage of any M2M IoT cellular provider (/products/connectivity)we were curious to see how the tariff would effect GSM/GPRS/LTE cellular modules and devices. As with most government fees I found there are nuances for when to add and when not to add the extra duty.

Have questions about importing cellular hardware? Our team of experts is available to offer project-level guidance. Schedule a meeting with a mobile IoT expert to discuss your project. (/contact-sales)

Classifying IoT Hardware

Most telephonic components from China fall underHTSUS section 8517 (https://www.customsmobile.com/htsus?chapter=85&highlight=8517#8517). Under the new import laws, these devices do not incur the extra duty. Although, its possible for a cellular device to be classified under a different section resulting in the extra 25% duty.

For example, looking at past cases I found this ruling for an encased GPS Tracker with Cellular GPRS (https://www.customsmobile.com/rulings/docview?doc_id=NY+N148555) used to monitor golf carts, utility vehicles, and turf equipment. This device was classified as “8526.91.00 - Radio navigational aid apparatus, other than radar”. As it turns out that HTSUS code is included in the new 301 ruling and will incur the new 25% duty if imported from China.The previous example could be an outlier as I found a number of other cases classifying devices with cellular for which the extra duty would not be incurred. For reference, an External USB Modem (https://www.customsmobile.com/rulings/docview?doc_id=NY%20N284052), Video Recorder+GPS with Cellular Backhaul (https://www.customsmobile.com/rulings/docview?doc_id=NY%20L82643), and Mobile Base Station (https://www.customsmobile.com/rulings/docview?doc_id=NY%20N108335) seem to be safe from the tariff.

Due-Diligence Required

There are hundreds of other product descriptions that may put cellular enabled hardware under the tariff. Suffice it to say anyone planning a medium to large hardware order should reach out to suppliers or better yet a Customs Broker. If you're interested in doing you're own review the official list of HTSUS line items under ruling 301 is available online (https://ustr.gov/sites/default/files/2018-13248.pdf)(PDF).As U.S. trade laws evolve, Hologram will continue to report on anything affecting cellular hardware. If you have any insight into how U.S. trade laws will impact IoT hardware reach out to me on Twitter @_benstr (https://twitter.com/_benstr) or through email benstr@hologram.io (mailto:benstr@hologram.io).To learn more about the tariff here are some helpful resources.

• Seeed Studio published a list of their products that incur the new tariff (http://www.seeedstudio.com/blog/2018/07/04/change-in-tariff-for-importing-into-the-us/)
• Macrofab discussed the impact of the most common electrical parts (https://macrofab.com/blog/decoding-tariff-impacts-us-electronics-manufacturing/)
• Andrew “bunnie” Huang shows how the tariff is “decidedly anti-Maker and ironically pro-offshoring” (https://www.bunniestudios.com/blog/?p=5349)
• Discussion on the "PrintedCircuitBoard" subreddit, further explaining the categories of affected products (https://www.reddit.com/r/PrintedCircuitBoard/comments/8rf4r8/discussion_of_usa_import_tariff_on_items_coming/)