US tariffs on China could affect American TV-watchers

The average American watches more than four hours of TV a day, or two months of nonstop watching per year.

And in a 65-year life, that person will have spent nine years glued to the tube, according to A.C. Nielsen Co.

If US President Donald Trump's proposed tariffs of 25 percent against China go into effect, watching a new high-definition, flat-panel screen could cost more.

How much more? There's no consensus on a figure, just that it will be higher.

If the full cost of the tariffs is passed on to consumers, a new television would be about $140 more, said Paul Gagnon, an analyst with data firm IHS Markit.

"On a $4,000 TV ... the tariffs might have a several hundred-dollar price impact," said David French, senior vice-president for government relations at the National Retail Federation, an advocacy group.

The levy could mean higher prices by 4 percent overall and 23 percent for TVs from China, according to a report commissioned by the Consumer Technology Association (CTA) and another association.

TVs and related components are among the more than 1,300 products from China, valued at $50 billion, which would be subject to the 25 percent tariff announced by the Trump administration.

Last year, of the 41.5 million TVs exported to the US, about 47 percent were imported from China, according to Bob O'Brien, president of Display Supply Chain Consultants, a market research firm.

He said the value of TVs imported from China last year totaled about $4 billion, which would be subject to Trump's tariff. So TV makers who export their products from China to the US would have to pay $1 billion.

Gary Shapiro, chief executive of the CTA, told The Wall Street Journal that the tariffs could affect this year's holiday shopping season because retailers are now starting to plan their orders for the end-of-year rush. "The uncertainty level is extraordinarily high," Shapiro said.

"There's potential this (could be) a major hit to the pocketbooks of Americans, based on what we're seeing right now," said Jack Cutts, senior director of business research at the CTA.

China exported around 80 million TVs globally last year, with nearly 30 percent, or 23 million, shipped to the US, according to the Beijing-based market researcher Sigmaintell Consulting. That represented about $3.9 billion worth of televisions.

Mexico is the primary assembly point for TVs sold in the US because of low wages. The parts arrive in California ports from Asia, are transferred to Mexico without a tariff to Tijuana, where sets are assembled and then sent to distribution centers in Southern California for sale in the US.

Only seven companies in the world produce panels large enough for flat-screen televisions, and they are in China, Japan, Taiwan and South Korea.

The tariffs would hit not only the American TV buyer, but also major Chinese TV-makers, including TCL Corp and Hisense Co Ltd, analysts said.

The tariffs will "greatly impact Chinese TV exports to the US," as TCL exports more than 30 percent of its total TV shipments to the market, and Hisense exports 6 percent, according to data from Sigmaintell.

If the tariffs take effect, Chinese manufacturers are expected to assemble their TVs in a third market, like Mexico, said Peng Yuhan, an analyst with Sigmaintell. "Many Chinese manufacturers have assembly facilities in Mexico, whose export duties to the US are low," Peng said.

If NAFTA — the North American Free Trade Agreement — is killed and tariffs are imposed, manufacturers will have to absorb those higher costs, because US consumers are generally unwilling to pay higher prices for televisions, Gagnon at IHS Markit told Bloomberg.

"Cost increases are not always seen in the form of price increases. Maybe that TV doesn't go on sale very often, which can have a big effect on sales," he added.

Cutts, the CTA's director of business intelligence and research, noted that the proposed tariffs don't apply just to finished TVs, but also to many of the sub-assemblies and printed circuit boards that go into TVs.

"Unfortunately, if enacted, these tariffs would apply at virtually every level" of the manufacturing process, he said.