Pay TV remote technology vendor Universal Electronics Inc. (UEI) is moving all manufacturing for its North American clients from China to Mexico, a process it hopes to complete by the fourth quarter of next year.

“We already have a manufacturing facility in Mexico, and are well into the process of shifting certain skews to that facility. Frankly, we have been preparing for this shift because the increasing labor rates in China have made those labor rates less and less favorable over time to those in other countries,” said Paul Arling, chairman and CEO of UEI, speaking to investors during the company’s third-quarter earnings call last month.

With the Trump Administration ramping up a trade dispute with China that could entail 25% tariffs on electronics imports, Santa Ana, Calif.-based UEI said it has begun to reduce staff at its Hong Kong facility, shifting headcount to factories in Mainland China.

“That’s step one,” said Bryan Hackworth, chief financial officer for UEI, speaking alongside Arling.

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UEI has relationships with most top pay TV operators in the U.S. This includes a warrants agreement with Comcast, for which UEI manufactures the X1 Voice Remote and various home automation electronics, just to name a few pieces of technology.

UEI said it isn’t shifting all of its manufacturing out of China, only the portion affected by the volatility of the ongoing trade dispute.

As for the decision to shift operations to Mexico, the company noted that it has had a factory located in the region already for several years. And it sees Mexico as more stable terrain, at least as far as the Trump Administration is concerned.

“We think that the trade tensions with Mexico have settled somewhat, if not completely,” Arling said. “So we feel pretty safe with that move, particularly for, again the products that are being shifted -- shipped into the United States. So we don't really see the tariff issue getting worse, although, again we could never guarantee what would happen there.”

Arling added that the tariffs could impact nearly half of UEI’s business.

“We will move that which is necessary, in order to provide cost effective solution to the customer. In other words not have them have to absorb the 25 % increase,” he said.

UEI is but one U.S. company serving the telecom sector with strong manufacturing ties to Asia.

Arris noted several months ago, for example, that the tariffs could add $200 million to the cost of manufacturing broadband equipment for all vendors. 

The Consumer Technology Association is praising President Trump's decision not to boost his 10% tariff on Chinese goods, including tech products, to 25% on Jan. 1, though that could only be a reprieve.

That came after a "working" dinner with Chinese Xi Jinping following the G20 summit in Buenos Aires.

"We're encouraged to see Presidents Trump and Xi working together to reduce trade barriers between the U.S. and China," said another president. That would be Consumer Technology Association president Gary Shapiro.

Shapiro is no fan of China's restrictions on U.S. goods, but points out that in the past five months since the 10% U.S. tariffs went into effect, China's response meant the tech industry alone paid $349 million more on imported goods, a $300% increase, which he said put several companies out of business and thousands of workers on the unemployment line.

Related: Trump Levying $200 Billion in Tariffs

Following his meeting and what he called one of the biggest deals ever made--the President tends to measure the country's success in terms of deals--President Trump said they would be "holding back on tariffs.

"On January 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10% rate, and not raise it to 25%," Press Secretary Sarah Sanders announced following the dinner.

She also said Presidents Trump and Xi have agreed to negotiate on "forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft," but if they are unable to agree on "structural changes," the tariff will be increased to 25%."

Related: CTA Says Tech Revenue Jumps But Tariffs Could Kneecap Sales

The President also signaled the Qualcomm deal to could be back on the burner: "President [Xi] has agreed that if the Qualcomm deal that they rejected -- which was one of the larger deals of its kind, which China rejected -- if that deal came back to him, he would most likely approve it quickly, which is a big thing."

That appeared to be a reference to Qualcomm buying chip manufacturer NXP, rather than the scuttled deal to buy Broadcom, which Trump blocked back in March..

The President also said the U.S. would be terminating NAFTA in the "not-too-distant-future, which he later said would be within the next six-months.

Casa Systems saw a 4.1% spike in third-quarter revenue to $71.5 million and said tariffs placed by the Trump Administration on select Chinese electronics imports are not hurting its business.

“I'm pleased to say that these tariffs have not--and we expect will not--have a significant impact on our business in 2018,” said Shaun McCarthy, interim CFO for Casa, speaking during the company’s third-quarter earnings call last week. (A transcript was provided by Seeking Alpha.)

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“We have completed our review of our supply chain and are not expecting a significant impact to our costs for 2019,” McCarthy added. “We have a flexible manufacturing and supply chain and plan to monitor developments in this area to minimize the tariff-related impact to our cost profile going forward.”

Andover, Mass.-based Casa makes cable modem termination systems and converged cable access platform equipment for the cable industry.

Related: Arris Says Trump Tariffs Will Add $200M/Year to U.S. Broadband Equipment Costs

McCarthy’s comments came a week after Arris told the FCC that the tariffs could drive up the annual industry cost for broadband components by $200 million a year.

Arris executives met with Federal Communications Commission officials last week, asking the federal government for grace under Trump administration-imposed Chinese import tariffs that Arris says will drive up annual costs for broadband equipment in the U.S. by $200 million.

“The proposed tariffs would effectively impose a massive tax on our country’s broadband ecosystem by significantly raising the costs of key broadband inputs,” read an Arris FCC filing. “Ultimately, American consumers and businesses, including small and midsize businesses, would pay the price. Moreover, the imposition of tariffs would create a drag on future broadband innovation, putting U.S. broadband leadership, including 5G wireless efforts, and American jobs at risk.”

The filing was first reported by Light Reading, which said it was discovered by Raymond James analyst Simon Leopold. Leopold estimated that with the step-up of the Trump Administration’s import tariffs from 10% to 25% on Jan. 1, 2019, the total costs of U.S. broadband equipment could spike by $500 million annually.

Related: Arris said to have held merger talks with Commscope

Arris said the products impacted by the tariffs include “telephony/broadband/data gateways, cable/telephony modems, nodes, wireless access points, bridgers, routers, controllers, and transceivers.”

In its filing, Arris included a letter, signed by 170 members of Congress, asking the United States Trade Representative (USTR) to exclude broadband from the tariffs.

At the very least, Arris would like some time for the U.S. broadband industry to adjust.

“If USTR proceeds with the proposed additional tariffs, it should provide sufficient time, at least 12 months, for companies to make the necessary supply chain changes,” Arris said. “Arris broadband equipment is complex and involves highly customized manufacturing operations. Working with its manufacturing partners, Arris will incur significant time and expense in shifting operations outside of China, particularly given the need to ensure the security of proprietary information and technology for ARRIS and its broadband provider customers.”

The Suwanee, Ga.-based tech vendor also said the tariffs threaten the larger goal of 5G deployment.

“This future wireless technology holds particular promise for broadband deployments in rural America, where it may not be economically or geographically feasible to widely deploy wireline fiber networks,” the filing added. “Given the transformative potential of 5G, the U.S., along with countries like China, South Korea and Japan, is racing to deploy 5G technology. According to one report, China is currently leading the world in 5G readiness, with the U.S. close behind.”

But “the proposed tariffs would raise the cost of these critical inputs, slowing the adoption of new 5G technologies by Ruckus customers and diverting resources away from Ruckus’s investments in 5G,” Arris said. 

The Telecommunications Industry Association says that the Trump Administration's finalized list of products subject to a new tariff will result in hundreds of millions of dollars worth of damage to the telecom equipment industry.

The good news is that consumer-connected devices--phones, tablets, etc.--were removed from the final list, says the Consumer Technology Association, but that left routers and circuit assemblies and networking equipment that tech groups say could slow the rollout of 5G and closing the digital divide.

Related: Trump Tariffs Threaten IoT Competitiveness

President Donald Trump said Monday (Sept. 17) that "following seven weeks of public notice, hearings, and extensive opportunities for comment, I directed the United States Trade Representative (USTR) to proceed with placing additional tariffs on roughly $200 billion of imports from China." He said they were a response to "unfair policies and practices relating to United States technology and intellectual property – such as forcing United States companies to transfer technology to Chinese counterparts."

The new tariffs take effect Sept. 24. 

“The tariffs imposed by the Administration will undermine the American adoption of strategic technologies including 5G, exacting long-term economic costs and hurting U.S. strategic competitiveness," said TIA SVP Cinnamon Rogers. "The finalized tariffs target equipment essential for next-generation telecom technology that will enable network-based innovations like Artificial Intelligence, cloud computing, and the Internet of Things. Taxing the network equipment used to deliver these services and devices will handicap America amid a global race for technology leadership.... Tariffs will also hurt consumers by making it more expensive to deploy broadband, thereby impeding efforts to narrow the digital divide and exacerbating inequities in internet access."

The Consumer Technology Association agreed, calling the tariffs bad policy as well as legally questionable, though praising the removal of consumer devices from the list, which it had strongly opposed.

"We appreciate the Trump Administration removing consumer connected devices, the largest tariff code CTA identified in our USTR (United States Trade Representative) comments," said CTA president Gary Shapiro. But he added: "Retaliatory tariffs, whether 10 percent or 25 percent, are bad policy. We are especially concerned about retaliatory tariffs on printed circuit assemblies, routers and networking equipment. They will stifle our global leadership in 5G, create an internet tax on businesses and cause uncertainty for companies."

The Consumer Technology Association (CTA) said the Trump Administration's proposed 25% tariff on TVs from China, such as the TCL and Hisense brands, would cost consumers $711 million in the next year alone.

That is according to a just-released study commissioned by CTA and the National Retail Federation.

TVs are just one of more than a thousand products facing tariffs, the groups said, all potentially hitting consumers' pocketbooks.

"These proposed [TV] tariffs are bad for the economy, businesses and American consumers," said CTA CEO Gary Shapiro, who suggested that the threat of such tariffs had already had the desired effect of getting China to open the door wider for U.S. products.

"Now that China has expressed some willingness to open its market and strengthen protection of intellectual property, the Trump administration should immediately initiate negotiations," said Shapiro.

CTA said it agrees China's unfair trade practices need to be addressed, but not by punitive tariffs where those punished are consumers.

"A TV made in China that costs $250 today would cost $308 after the tariffs are applied," the CTA said, citing the study, "and one that costs $500 today would cost $615 after the tariffs are applied."