Nvidia, HP, and Zotac are urging the Biden administration to temporarily exempt PC graphics cards manufactured in China from US tariffs.
The companies made the request to the office of the US Trade Representative (USTR), which is considering reinstating exclusions to the Trump-era tariffs on certain Chinese exports. Nvidia told the USTR on Wednesday it supports reinstating the tariff exclusions, citing the lack of GPU manufacturing outside of China.
“The products are not manufactured in the US and in only limited amounts in Taiwan,” Nvidia said. “Efforts to create new capacity in countries that presently do not manufacture such products (such as the US and Vietnam) were unsuccessful and were severely hampered by the fallout from COVID-19.
“Freight/air cargo was severely constrained due to the tremendous reduction in passenger flights which limited the ability to expand air cargo capacity in new sites,” the company added. “Given the limits on supply of semiconductors, it also would have been the wrong time to face lower yields that are associated with new sites.”
The tariffs, which went into effect in January, impose a 25% duty on Chinese-manufactured computer components, including graphics cards and motherboards. As a result, many vendors including Asus, EVGA, and Zotac were forced to raise prices on their products during a historically bad chip shortage, which has made obtaining a PC graphics card incredibly hard. Not helping the matter is rampant scalping, which has caused prices to skyrocket even further.
In its own comment to the USTR, Zotac said little has changed with the world’s electronics supply chain since 2018 when the Trump administration first imposed the China-focused tariffs.
“China remains…the major manufacturing base of video graphics cards and personal computers in the industry. The major reason is due to the upstream supply chain remaining mostly in China,” the company said.
Zotac said that it’s currently working with a contract manufacturer in Taiwan to assemble the products. However, the company still needs to rely on China since the country’s electronics industry is the key cog in turning raw materials into components. “We are unable to identify alternate sources,” Zotac added.
HP also pointed to the central role of China in the electronics supply chain in its remarks to the USTR. “AMD and Nvidia have manufacturing locations throughout Asia, in China, the Philippines, Hong Kong, Taiwan, and Malaysia. However, different product lines are sourced from designated locations. Regardless of where a graphics chip is initially produced, China is a hub for the ‘back-end’ production (i.e., labor-intensive manufacturing and testing steps) and thus the primary source for imports,” the company said. “The products HP sources are not currently produced elsewhere at sufficient capacity, quality, and compatibility needed.”
Wednesday marked the final day to submit comments to the USTR on requesting an exemption for the Trump-era tariffs. Dozens of companies, including Apple, Google, and Intel, have also filed comments, urging the USTR to temporarily lift the tariffs on other Chinese-manufactured electronics such as motherboards, power supplies, and trackpad devices.
The US Trade Representative’s office says it’ll “evaluate the possible reinstatement of each exclusion on a case-by-case basis.”
“The focus of the evaluation will be whether, despite the imposition of additional duties beginning in September 2018, the particular product remains available only from China,” the department said. “In addition, USTR will consider whether or not reinstating the exclusion will impact or result in severe economic harm to the commenter or other US interests, including the impact on small businesses, employment, manufacturing output, and critical supply chains in the United States.”
However, the White House will also take into account if reinstating the tariff exclusion will affect the USTR’s overall goal of reining in China’s allegedly unfair trade practices.
