Head of CES: Trump 'Just Wrong' on Tariffs

As the CEO of the Consumer Technology Association, with more than 2,200 companies as members, Gary Shapiro needs to have his finger on the pulse of innovation. That's because he oversees CES, the world’s biggest technology event. But he also sees it as his duty to defend against those forces that he believes threaten innovation and the overall health of the technology industry in the U.S.

Courtesy of Pinkston Group

Courtesy of Pinkston Group

And during a very candid interview with Tom's Guide, it became clear that while there is much to be excited and optimistic about as we enter 2019, there's also cause for concern.

These are just some of the highlights:

  • On China tariffs, President Donald Trump "is just wrong when he says that the Chinese companies are paying. No, the American consumer is paying."
  • 5G and AI are going to be the two biggest themes of CES 2019, and they'll be coming together in autonomous vehicles and health care. Expect big announcements from AT&T, Verizon and others. Shapiro says the word "handheld," so expect 5G phones and not just 5G-enabled hotspots.
  • Shapiro is not pleased with Facebook’s multiple privacy scandals, saying "they clearly violated consumer trust." Worse, "they poisoned the water" in the debate over how to best balance privacy and innovation.

As we head into CES 2019, which gets underway Jan. 8 in Las Vegas with an expected 180,000 attendees, Shapiro sat down with me to discuss the state of the consumer electronics industry. His new book, Ninja Future: Secrets to Success in the New World of Innovation (William Morrow), goes on sale Dec. 31.

CES has evolved a lot over the years. What does this event stand for now?

The diversity of groups and people has changed phenomenally. For example, we have a whole bunch of ministers coming from different countries, and the ministers' titles are all different. Some are innovation, some are the economy, some are transportation. Over one-third of our attendees are from outside the U.S.

Several years ago we saw convergence in technology, and we went after it...from automobiles to Hollywood, from health care to robotics. We tried to get everyone and serve as an optimistic inspiration starting point. We always think about increasing the value of serendipity, of discovering something you didn't expect, of putting two unrelated ideas together, which is really the essence of innovation.

MORE: CES 2019 Preview: 6 Biggest Trends to Watch

What are going to be the biggest trends of CES 2019?

AI is the huge story of the show, so in a sense, it's one of the key ingredients. You're going to see a lot of continuation of the theme. Everyone from Panasonic to Yamaha to IBM will be talking about it.

We're seeing that in health care. We're seeing it in government policy. There'll be a lot of talk about privacy and AI. Augmented and virtual reality will still be here. It's expanding to all sorts of different commercial applications.

The one thing you'll see that we didn't talk about much  in 2018 will be 5G. We have the top people from AT&T and Verizon giving major keynotes. We'll see it from the chip companies. We'll see it in some of the handheld announcements and products that will be shown. And we're the only event that actually brings the full 5G in mobile ecosystem together.

We'll see it with the keynote of AMD's president, Dr. Lisa Su. We'll see it with Verizon's CEO, Hans Vestberg. We'll see it with Ericsson Intel and Sprint, T-Mobile exhibiting. 5G is really big.

And then you'll see more of an emphasis on digital health. That's really, really big. There's certainly more exhibitors and more conference programming. For the first time, we're actually giving doctors continuing medical education credits. I don't think that's ever happened before at a technology trade event.

5G is finally becoming real in 2019. What do you think it will enable?

It will be one of the core technologies, I believe, behind self-driving vehicles, so it'll save lives. That excites me. Saving lives and preventing injury.

5G will also deliver amazing broadband in crowded congested cities. I think it's easier to deploy, because it's a lot of small little dishes. It's not the answer for rural broadband. I'm really interested in seeing what AT&T and Verizon say about it.

It will allow for a lot of the other things we're talking about at CES, like remote monitoring in health care and and telework. You may not have to go to your doctor, if you could get diagnoses remotely thanks to 5G. That's important.

"5G will be one of the core technologies behind self-driving vehicles, so it'll save lives."

CES has become a much bigger platform for the auto industry. How has the integration of technology changed consumer expectations?

For me when I was growing up, it was all about zero-to-60 and horsepower. And then it went to if you had a Bose or a Sony stereo or sound system, it was cool, and they could sell it. When people are getting their new cars now, they're checking all the boxes for technology, including collision avoidance and lane departure.

We're a place where the chip companies are showing what they can do for the auto companies who are cutting deals with all sorts of the display people, and then the brand- name people, and they're all coming together.

MORE: The Truth About 5G: What's Coming (and What's Not) in 2019

What did you make of the latest revelations around Facebook and their other privacy scandals throughout 2018?

I watched how Walt Mossberg, who's Facebook friends of mine, announce he's leaving Facebook. And I understood it. As a user of Facebook, it's, like, "Oh my gosh! They were able to do this? I didn't know that." I'm sure even people at Facebook are disappointed, because they clearly violated consumer trust.

I'm a consumer, and I use Facebook, and they're a member of ours, I will disclose, and they participate in CES. Having said that, though, I'm not going to defend the indefensible here.

How do we balance privacy and innovation?

My job is to protect innovation and how it can proceed. But also, I'm an American, and we're an American organization. We don't allow non-Americans to be members. We allow them to participate in CES. We allow them to join through a U.S. subsidiary.

There's a global battle going on in artificial intelligence between us and the Chinese, and even the Europeans. China has no privacy. The government can do anything they want. And they have a focus on AI. And they've got millions of engineers. And they have a strategy.

"Facebook clearly violated consumer trust...I’m not going to defend the indefensible here."

Europe has not done well in artificial intelligence, or let's be honest, in innovation generally in the last 20 or 30 years. They have very few unicorns. And they have clamped down on privacy with the right to be forgotten. So this is like, to me, Goldilocks and the Three Bears.  China is too hot, Europe's too cold, and we're in the middle, where I don't want us to do anything stupid.

So I want to balance privacy, but 90 percent plus of the applications for artificial intelligence have nothing to do with what everyone is talking about. Factory automation and doing things better in factories. Even self-driving cars.

So why do I care about Facebook? In a sense, they've poisoned the water for the debate, because they didn't act responsibly, and it's upsetting to me.

MORE: How to Stop Facebook From Sharing Your Data

So are you worried about there being an overreaction?

My fear is I will fail at my job if we allow our government to, basically, with good intentions, do everything to protect privacy. Ninety-nine percent of other companies have been really focused on their reputation, because they know their future depends upon it. My belief is that people try to do the right thing, and, generally, they do.

We are entering a great era of solving the most fundamental human problems with artificial intelligence and robotics, which we need, as we are living longer and we have no one to take care of us.

And I don't want us to mess it up as a society, because every time there's been a new technology there's been concerns about privacy, from the invention of the credit card, where privacy was the biggest issue, to video rentals, where privacy was an issue, to using the internet itself, where privacy is an issue. And we've always worked through them, because the greater good of communication, education, better health care, these are good things. So let's not throw the baby out with the bathwater.

The Trump administration's tariffs on Chinese goods are leading to higher prices for some gadgets and components. Are you worried about the impact on the electronics industry?

Well, there's different types of tariffs, and definitely the steel tariffs have a huge impact in the cost of making things, and even making cars and doing things and consumers are seeing the challenge. The Chinese tariffs are starting to be felt, and they'll be felt ... I think a lot of companies shipped a lot of stuff in early to get through the holiday season.

Trump is just wrong when he says that the Chinese companies are paying. No, the American consumer is paying. Definitely, many American companies I'm aware of, because my members ... I've spoken with many very upset CEOs. They've absorbed a lot. On their earnings call, iRobot said their stock took a huge hit, because they're a relatively small company, and they absorbed $5 million worth of tariffs that they paid.

The good news, in my view, is that President Xi and President Trump agreed to freeze the situation. Because the bad news, frankly, we were dreading, especially with CES in January approaching, was that the 10 percent tariffs was supposed to go to 25 percent. And that would've been devastating.

Are you optimistic that the U.S. and China will work things out?

There's a 90-day cooling-off period where nothing is going to happen in terms of raising tariffs. And we're pushing them to figure it out, because, you know, when the two largest economies get into a battle — the old saying is when elephants fight, the ground gets trampled. Well, the ground would be the American consumer. And the Chinese consumer, frankly. So it's not good for either country. Tariffs are taxes, and consumers pay the taxes, so it's bad.

“Trump is just wrong when he says that the Chinese companies are paying. No, the American consumer is paying.”

President Trump is right that the Chinese have been unfair in their treatment of American companies. I advocated that we do to the Chinese exactly what they do to us. I'm not saying we should steal their intellectual property, but we should have property-buying restrictions on them. We should require that they have U.S. partners if they do business here. And they have a lot of ambiguous laws, and they hurt American businesses.

It's gotten better, and it's gotten better not because they love us. It's gotten better in part because, especially in intellectual property, because they have now Chinese businesses that are innovating that need intellectual property protection.

We have a show in China. We know what it's like. We have to have a partner there. So I understand it. And I don't think Trump's wrong. I just think his tactics are very harmful.

If CES 2019 is a success, what will people be talking about?

There's a sense of hope for the future, that things will be better. It's kind of what our country was based on. We're an immigrant country, and people came here for a better life, because there's opportunity. There's entrepreneurship. There's the ability to think and do what, in a sense, what you want, and try new things, and that's what CES exemplifies. It's a sense of the future will be better, because we'll be solving fundamental problems.

There's some people who will say, "Wow, that's a greater home theater experience I'll have," or "My education will get better," or "My health care will get better." I see solutions for problems in my own life as my parents get older. So I think people take away different things depending on what their personal interest is, but, generally, the common theme is a sense of optimism.

It's about bettering mankind. And that's what I hope people take away.