Tariffs imposed by President Trump on goods from China that went into effect today are expected to drive up prices on a wide range of telecom equipment, including various cables, cable management and racks, batteries, power supplies, tools and other devices. The tariffs currently are set at 10% but are scheduled to rise to 25% January 1.
The total value of goods that will be impacted is about $200 billion, although not all the new tariffs involve telecom equipment.
When he imposed the new tariffs a week ago, President Trump said he was doing so based on a U.S trade representative study that found that “China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property – such as forcing United States companies to transfer technology to Chinese counterparts.”
According to the president, the U.S. has urged China to change these practices for months, but China has been unwilling to change its practices.
FCC Commissioner Jessica Rosenworcel, however, told attendees at a telecom industry event that the new tariffs would be “wildly detrimental” to the U.S. rollout of 5G wireless networks, reported media outlet Smart Cities Dive.
According to the report, Rosenworcel said the tariffs will impact equipment such as antennas, switches, routers, circuit boards and other telecom equipment.
Telecom equipment vendors and distributors are notifying customers about the impact of these tariffs. One such email obtained by Telecompetitor about the tariffs noted that “[u]nfortunately, tariffs are having an unavoidable impact on the pricing in our industry” and “new prices on affected products are being implemented in according with these tariffs.”
China Woes Beyond Tariffs
The Trump administration also has had a contentious relationship with Chinese telecom equipment manufacturers at least as far back as early this year. In March, the FCC proposed prohibiting service providers that receive funding through the Universal Service Fund (USF) program from using equipment from certain manufacturers believed to be a threat to national security.
Although the FCC did not name specific manufacturers, the commission sought feedback on how prohibited equipment would be identified and suggested the possibility that those restrictions might be based on restrictions already imposed by other federal agencies such as the Department of Defense. The DoD is prohibited from using certain telecom equipment from Chinese companies Huawei and ZTE.
Concerns that telecom equipment from certain manufacturers could be used as a backdoor into U.S. telecom networks initially arose several years ago, prior to President Trump’s election, and large U.S. carriers have avoided using equipment from the manufacturers in question. But some smaller companies, including some that receive USF dollars, have already deployed equipment from those manufacturers in their networks.
In July, three associations representing small and mid-size broadband providers and wireless providers filed comments with the FCC opposing the proposed USF prohibitions. The associations said they support efforts to protect the U.S. telecom supply chain but argued that the proposed rule is not the best way to combat the problem.
Image courtesy of flickr user Gage Skidmore.