1300 17th St N, Suite 900 -–- Arlington, VA 22209 -–- 703.841.3200

The association of electrical equipment

and medical imaging manufacturers

www.nema.org

National Electrical Manufacturers Association

PUBLIC DOCUMENT

October 8, 2018

The Honorable Robert E. Lighthizer

Office of the United States Trade Representative

600 17th Street NW

Washington, DC 20508

Re: Addendum to Request for Exclusion of Particular Products from the 

Determination of Action Pursuant to Section 301

Dear Ambassador Lighthizer:

National Electrical Manufacturers Association (“NEMA” or the “Association”) is writing 

on behalf of Traditional Thermostat manufacturers pursuant to the Procedures to Consider 

Requests for Exclusion of Particular Products from the Determination of Action Pursuant to 

Section 301 as set forth in docket number USTR-2018-0025-0001. The information contained 

herein is an addendum to the product exclusion form, and is intended to address questions set forth 

in the Federal Register on July 11, 2018 (83 Fed. Reg. 32181).

NEMA respectfully requests an exclusion from the Section 301 tariffs for traditional, wallmounted thermostat devices that automatically adjust heating and cooling temperature settings

(“Traditional Thermostats”). These products are classified in Harmonized Tariff Schedule of the 

United States (“HTSUS”) subheading 9032.10.0030, as “Automatic regulating or controlling 

instruments and apparatus; parts and accessories thereof: Thermostats: For air conditioning, 

refrigeration or heating systems: Designed for wall mounting.” 

NEMA represents nearly 350 electrical equipment manufacturers that make safe, reliable, 

and efficient products and systems. As a leading industry group for companies that manufacture 

and sell residential & commercial controls, NEMA is uniquely positioned to request this product-
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specific exclusion. If granted, this product exclusion will benefit U.S. companies and U.S. 

consumers. 

I. Product Background

The Traditional Thermostats included in this exclusion request all share common productspecific features of being controlled locally and automatically adjusting temperature based on a 

manually set temperature or a programmed temperature sequence. While there may be additional 

minor features that vary within this product category (e.g., clock display, setting switches, etc.), 

the product-specific functionality distinguishing these products from other thermostat products is 

the manually input temperature setting and control, which automatically regulates temperature

once set.

The Traditional Thermostats at issue in this request are not “smart thermostats” as they do 

not have internet connectivity, nor do they have functionality that allows the system to 

automatically interpret user preferences based on use or other remote input. The user interface for

Traditional Thermostats is manual and is located on the thermostat box panel. 

While exact dimensions may vary, the Traditional Thermostats at issue are all wallmounted, plastic-encased boxes with a either a manual dial/lever or digital display that indicates 

the room temperature, temperature setting, and the type of function used (e.g., Cool, Heat, Fan).

The devices are wired to the HVAC system and are powered by the connection to the system, with 

a battery backup. 

NEMA has included representative examples of the types of Traditional Thermostats 

covered by this exclusion request as Exhibit 1 to this addendum.
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II. Whether the particular product is available only from China? In addressing this 

factor, requestors should address specifically whether the particular product and/or 

comparable product is available from sources in the United States and/or in third 

countries.

The vast majority of thermostat production occurs in China. Even in scenarios where 

subassemblies are manufactured in countries outside of China, most U.S. and third country 

manufacturers of thermostats assemble their products in China and have no alternative production 

locations. U.S. import data also reflects the limited alternative sourcing options. In 2017, for 

example, more than 56 percent of all wall-mounted thermostats (9032.10.0030) based on value 

were imported from China.1 The next largest market is Mexico, with 37 percent market access for 

thermostats.

We understand from members that while there may currently be production of some 

thermostats in Mexico, the capacity to add additional production is not currently available.

Similarly, production capacity for thermostats in the U.S. is also unavailable. This makes China, 

with its mature manufacturing base, the only currently tenable business option for Traditional 

Thermostat production.

A leading Traditional Thermostat supplier — which has been producing its products in 

China for over 25 years without any intellectual property infringement or technology transfers —

believes requalifying all tooling and fixtures currently used in production in China would cause 

severe economic harm as the move would be akin to “starting over.” To recreate the supply chain 

would take more than one year and would result in chaos as the transition would need to occur 

 

1 Based on International Trade Commission statistics.
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while production was ongoing. Finally, all products produced under a new supply chain would 

have to be field tested, which can only occur seasonally. Depending on the timing of the change, 

this could stretch the supplier transition process well past a year.

Another major supplier of Traditional Thermostat undertook an intensive review to 

quantify the effort needed to shift production to a third country. In the best case scenario, it 

estimated that the move would cost at least 3 million dollars, and would take 12-24 months to fully 

transfer production. The analysis considered the cost of finding, hiring, and training new labor, 

refurbishing or replacing existing tooling, material ramp up costs, project management and labor, 

sustaining engineering support, lost production time, and space for an additional manufacturing 

line, among others. The company concluded that while a shift in production could be possible, 

currently sourcing products from a third country is not an option, and would not be an option for 

at least 12-24 months.

In short, the companies represented in this exclusion request do not currently have access 

to alternative suppliers outside of China. To transition production of Traditional Thermostats back 

to the United States or to a third country is a process that would likely take in excess of one year 

and would cause severe economic harm and business disruption. However, if the imposition of 

tariffs on China will continue, NEMA requests that the subject Traditional Thermostats be 

excluded from the Section 301 tariffs for a period of one year so that producers can begin moving

the supply chain away from China.
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III. Whether the imposition of additional duties on the particular product would cause 

severe economic harm to the requestor or other U.S. interests?

The addition of 25 percent tariffs on Traditional Thermostats would cause significant harm 

to the Traditional Thermostat industry and to consumers. Consumers are being impacted directly 

by this tariff, as the added expense is leading to price increases. Thermostats are necessary for 

virtually every dwelling and business as they control the single largest operational system in most 

buildings — the regulation of heating and cooling. Accordingly, there is no way around these 

increases for consumers. There are an estimated 120 million thermostats installed in the United 

States today and consumers purchase approximately 17 million thermostats per year for residential 

use. 

Unlike smart thermostats, Traditional Thermostats can serve consumers with more limited 

means or tighter budgets. Indeed, the appeal of Traditional Thermostats is often their price point, 

as they lack some of the technological and convenience features of more modern thermostat 

models. In fact, in a survey conducted in 2017, price was most often mentioned by homeowners 

(71 percent of the time) as a top driver of thermostat purchases.2 Therefore, an additional 25

percent tariff on the cost of products that are already price-sensitive will devastate the market for 

Traditional Thermostats.

The thermostat industry will also suffer severe economic harm if Traditional Thermostats 

are not excluded from the tariffs. Small- and medium-sized businesses that sell and install 

thermostats will be affected by the price increases and may either not be able to provide a wide 

range of product offerings, making them less appealing, or they will have to pass the added expense 

 

2 Parks and Associates – Survey: American Broadband Households and their Technologies Q4/2017. 
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on to customers, making them less competitive. The impact on the trades that support HVAC 

systems cannot be understated, as the tariff increases have affected that industry significantly, from 

steel and aluminum building materials, to the tools, materials, and devices (like thermostats) used 

to complete commercial and residential development projects.

IV. Whether the particular product is strategically important or related to “Made in 

China 2025” or other Chinese industrial programs? 

Traditional Thermostats are not covered by the Government of China’s “Made in China 

2025” strategy. Most of the industries and products included in the strategy relate to industrial 

production, efficiency, and technology. Traditional Thermostat technology is not cutting edge, nor 

of the type that would lead to innovations in industrial efficiency or effectiveness. Traditional 

Thermostats are not the types of products used in industrial applications to control machinery, 

production processes, or other large platforms. Traditional Thermostats use mature, readily 

available technology to provide basic controlling functions for commercial and residential heating 

and cooling applications.

NEMA’s Traditional Thermostat companies report that they have not been involved in any 

forced technology transfers, nor have they received any incentives from any Chinese governmental 

body to locate production in China. Likewise, members have not reported any breaches in cybersecurity involving Chinese operations that may jeopardize the security of their intellectual 

property. Our members have strict policies and controls in place that limit access to business 

proprietary information. Under these policies, the technology and know-how remain exclusively 

in the hands of the U.S. manufacturers and sellers that are seeking an exclusion from the Section 

301 tariffs.
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NEMA supports a product-specific exclusion for Traditional Thermostats because it 

recognizes that these products represent mature technologies that are not central to China’s 

industrial manufacturing aspirations. As such, this technology has not suffered under the policies 

the administration is trying to highlight.

V. Proposed Traditional Thermostat Exclusion Language

NEMA respectfully submits the following exclusion language to be added by Traditional

Thermostat manufacturers and sellers to the commercial invoice used to make entry into the United 

States. This language should facilitate U.S. Customs and Border Protection’s administration of the 

requested product-specific exclusion. This language reads:

Wall-mounted thermostat devices that automatically adjust heating and cooling 

temperature settings through manual adjustment or manual programming on the 

component interface. These products are not Wi-Fi enabled or suitable for remote control.

VI. Conclusion 

As described above, NEMA members report that relocating Chinese assembly operations 

to the United States or other countries is not practicable and feasible, as it would be extremely 

costly and would take an extended period to switch to alternative suppliers, to qualify new 

production processes, and to move engineering resources to support the change.

Equally concerning is the impact of the 25 percent tariff on American consumers and small 

businesses. As the primary users of Traditional Thermostats, U.S. consumers and small business 

owners will bear the additional expense of price increases resulting from the high tariff, plus the 

added costs of our concerned companies as they make unanticipated and costly adjustments to 

their supply chains.
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Finally, it is clear that the Traditional Thermostat technology, which is mature and readily 

available in the public sphere, is not at all relevant to China’s “Made in China 2025” program, 

which we understand was the key precipitating factor for the Section 301 investigation. Traditional

Thermostat technology in no manner contributes to China’s industrial and manufacturing 

aspirations.

For these reasons, NEMA respectfully requests a one-year exclusion from the Section 301 

tariff for Traditional Thermostats. We would be pleased to provide additional information that is 

needed by USTR to facilitate its determination.

Respectfully submitted,

Philip Squair

Vice President, Government Relations

cc: Craig Updyke, Director, Trade & Commercial Affairs, NEMA
Exhibit 1