A technology group says that tariffs could raise technology costs by $2.4 billion in 2019. The tariffs being considered could result in us paying between $1.6 and $3.2 billion more for electronic products. This includes things like circuit assemblies, routers, modems, smart speakers, smartwatches, Bluetooth-enabled devices, and other IT devices according to a study published by the CTA (Consumer Technology Association).
"This Harmonized Tariff System (HTS) product category targeted for tariffs includes printed circuit assemblies, an input into the production of countless products in today’s economy.
Imposition of the tariffs causes some sourcing of U.S. imports from China of printed circuit assemblies to shift to U.S. producers and other countries such as Mexico, Malaysia, Thailand and Taiwan. U.S. purchasers of printed circuit assemblies will see prices of Chinese products jump by 9 to 23 percent (for the 10 percent and 25 percent tariffs, respectively); costs of alternative supply from U.S. manufacturers will also be higher by 2 to 3 percent."
How Did This Tariff War Start?
President Trump imposed tariffs on $50 billion in Chinese goods. He cites the $375 billion trade deficit the U.S. runs with China as the reason. China announced $60 Billion in tariffs on U.S. goods if Trump imposed the additional duties.
And now the United States says it will impose tariffs on an additional $267 billion worth of goods if China takes retaliatory action against our farmers or other industries. The tariffs are aimed at affecting China, but they will also bring higher costs for businesses and consumers.
Where Will It Stop?
The U.S. and China have the world's biggest trading relationship but it is increasingly strained over complaints that Beijing's technology development tactics hurt American companies. One such example is where a Chinese court banned Micron Technology Inc. chip sales, cutting the U.S. company off from the world’s largest semiconductor market.
Trump's tariffs target tech products that benefit from industrial policies such as "Made in China 2025," for Chinese competitors in robotics, artificial intelligence, and other fields.
What Does This Mean For Businesses and Consumers That Use Technology Products From China?
This could directly hit us all in the bank account, with "a substantial negative impact," the CTA said. Tariffs of 10 to 25 percent would increase prices on popular personal electronics and other IT solutions.
Most of these products connect us all to the Internet and help us work and stay connected. The list of potential devices includes:
- circuit assemblies,
- broadband modems,
- smart speakers,
- smartwatches and other smart appliances,
- 3D printers,
- routers,
- graphics cards,
- robotics,
- AI products, and
- Bluetooth-enabled devices such as wireless headphones and fitness trackers.
They could increase in cost by 8.5 to 22%. And the CTA estimates that all connected devices, regardless of where they are manufactured, would probably cost 3.2 to 6.2% more than they do today.
“Foreign governments don’t pay the cost of tariffs, Americans do – and for that reason, U.S. trade policy needs to steer clear of tariffs that act like taxes on American manufacturers and consumers...The danger we face – the unintended consequence – is that tariffs mean Americans will pay more for all the devices they use every day to access the internet," said Gary Shapiro, CEO, and president of the CTA, an Arlington, Virginia-based trade group representing device manufacturers, software developers, and other tech companies.
What Does This Mean In Real Dollars?
Imported circuitry assemblies could increase by 9 to 23 percent, which would cost us an added $900 million to $1.8 billion in the year 2019:
"As a result higher costs, totaling $900 million to $1.8 billion more, American manufacturers of products that contain printed circuit assemblies will purchase between 6 and 12 percent less from suppliers overall. Overall, considering U.S. producer gains, increased tariff revenues, and losses incurred by consumers and the economy generally, tariffs will cost the economy anywhere between $110 million to $613 million annually." (CTA)
Will Other Services or Solutions Be Impacted?
Another potential repercussion could be higher-priced broadband and cloud storage bills. In the list of 6,200 potential products considered for tariffs are printed circuit assemblies used by large data centers, along with networking products such as gateways, routers, and modems.
Data centers will probably have to increase their prices for customers such as Internet Service Providers (ISPs). ISPs will also be dealing with additional costs for modems and routers.
"Eventually, the higher cost will be passed down to consumers...All those products actually make up the ecosystem of the internet," Chandler said. "You start to see a world where you could start stifling innovation and creative ideas and thinking, as well as communication just on a peer-to-peer basis...Beyond the consumer effects, smaller tech startups have concerns about how much higher prices could cause them to lay off workers or not hire new ones. That's the only place they have to trim (their budgets)," says Sage Chandler, the CTA's vice president of international trade.
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