Trump tariffs would increase laptop prices by $350+, other electronics by as much as 40%

[Author 0]

Trump tariffs would increase laptop prices by $350+, other electronics by as much as 40%

Trump tariffs would increase laptop prices by $350+, other electronics by as much as 40%

data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

If Donald Trump wins the 2024 U.S. presidential election, your next laptop could be a lot heavier . . . on your wallet. During his current campaign, the GOP candidate and 45th president has promised to impose massive tariffs of 10 to 20% on goods from all countries plus a special 60% rate for those from China. Those tariffs are paid by importers but are passed on to consumers in the form of higher retail prices. And according to a recent report by the CTA (Consumer Technology Association), even Trump’s lowest proposed tariffs would have huge inflationary effects on the cost of popular gadgets such as laptops, monitors, TVs, smartphones, and desktop computers.

Working with analyst group TPW (Trade Partnership Worldwide), the CTA estimates that a 10% global tariff + 60% China tariff would raise the cost of laptops by 45%. 

That’s an additional $357 for models that hit what the organization considers an average price point of $793. Shoppers seeking premium models on the other hand, including most of those on our lists of best ultrabooks or best gaming laptops, would see much higher increases — to the tune of $450 for every $1,000 of current pricing. 

“Tariffs are regressive taxes that Americans pay. They’re not paid by a foreign government,” Ed Brzytwa, CTA’s VP of International Trade, told Tom’s Hardware. “They’re taxes that importers in the United States pay and foreign governments and foreign countries do not pay those tariffs. So when I say they’re regressive, it means that they harm poor people and people of little means more than they harm wealthy people.”

Though importers, which could be import companies, OEMs or retailers, are paying the tariff fees to the government, consumers will bear the burden. Brzytwa said that nearly 100% of the cost of past tariffs, such as those previously imposed by the Trump and Biden administrations against certain Chinese imports (semiconductors, batteries, steel, minerals, electric vehicles, medical products), were passed through to consumers.  

Prices going up on phones, TVs, monitors, more 

The CTA and TPW also estimate that the cost of smartphones would be 25.8% higher, monitors would jump up 31.2%, and game consoles, which are largely manufactured in China, would go up by 39.9%. 

Because most of them are not manufactured in China, the retail price of prebuilt desktop PCs would only increase by 6%. All told, the cost of electronics would collectively rise by $90 billion each year, costing U.S. consumers a lot more money and leading to fewer sales overall.

Get Tom’s Hardware’s best news and in-depth reviews, straight to your inbox.

The table below shows all of CTA’s price increase estimates.

Swipe to scroll horizontally

Category	Increase in Consumer Price (%)	Lost Consumer Spending Power	Average Retail Cost Increase
Laptops and tablets	45.0%	$32.5 billion	$357 (laptops) / $201 (tablets)
Smartphones	25.8%	$25.6 billion	$213
Connected Devices	10.2%	$7.9 billion	$5 – $37
Video Game Consoles	39.9%	$6.5 billion	$246
Computer Accessories	10.9%	$5.2 billion	$25
Monitors	31.2%	$5.0 billlion	$109
Desktop Computers	6.2%	$3.0 billlion	$74
Televisions	9.0%	$1.5 billion	$48
Lithium-Ion Batteries	12.1%	$1.5 billion	Up to $11
Speakers & Headphones	10.9%	$1.1 billion	$29 speakers / $35 headphones

(Data credit: Consumer Technology Association (CTA)®)

Tariffs assessed based “substantial transformation”

So how would the tariffs be assessed? Many electronics contain components that come from China but are assembled elsewhere. Will importers pay tariffs at the Chinese rate or the much lower, non-China rate? The answer depends upon whether the components of the shipped product underwent a “substantial transformation” before they were shipped to the U.S. 

The U.S. government’s International Trade Administration website gives examples of substantial and non-substantial transformations. Using flour and sugar from country A to bake a cookie in country B would be substantial, and therefore the cookie would be assessed as coming from country B. But taking vegetables from country C and freezing them in country D would not change their origin, because freezing is not transformative enough.

Moving production to other countries takes time

The U.S. Customs and Border Protection (CBP) agency assesses tariffs based on the product value and country of origin that’s listed on the bills of lading that shippers use. A laptop maker, for example, could try to lower its costs by doing more of its assembly outside of China, but according to Brzytwa, that can’t happen overnight.

“For many of the products, like laptops and tablets, smartphones . . . those are by and large still made in China, although that is shifting,” Brzytwa said. “You’ve seen over the last year announcements by a number of companies on creating new manufacturing facilities or . . . using contract manufacturers, but they’re sourcing from countries other than China. But it’s not in the volumes that you would need to supplant that Chinese production.”

For example, Foxconn announced plans to expand server production capacity in Mexico two weeks ago, citing ‘crazy’ demand for Nvidia’s next-generation Blackwell GPUs. And Malaysia has seen a massive boost in semiconductor manufacturing, we reported in March. 

Brzytwa posited that it can take years to set up new manufacturing facilities and to get them rolling, however. So even if companies want to move more production to low-cost manufacturing centers such as India, Vietnam or Mexico, it won’t happen overnight. And meanwhile, they’d be paying a full 70% tariff (60% + 10%) on China-made products. That’s why CTA’s report estimates that laptop sales would be hit especially hard by Trump’s proposed tariffs: The U.S. imports 79%t of its laptops and tablets from China.

We reached out to several laptop OEMs to ask them where their laptops are currently manufactured, but none would provide precise information. Lenovo confirmed to Tom’s Hardware that it has manufacturing facilities both inside and outside of China (including Mexico, Brazil, India, Japan and North Carolina). And Dell said only that it has a “globally diverse supply chain with Dell and partner-owned manufacturing facilities around the world.”

Brzytwa also noted that the CBP has significant investigative capabilities and would not allow a company to claim that it had created a substantial transformation to avoid the highest tariffs. Anyone caught cheating could face penalties. 

 Could Trump actually implement these tariffs?

Unlike other taxes that a U.S. president might want to levy, tariffs do not require congressional approval. So were Trump to be elected and face a Democratic congress, he could still make his proposals a reality. 

There are laws that the executive branch has used to impose tariffs in recent years: Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. In 2018, Trump used Section 232, which empowers the President to create trade restrictions based on national security concerns, to impose a 25% tariff on all steel imports and 10% on aluminum imports, with exemptions for some countries. In 2022, President Biden adjusted these tariffs, giving some tariff-free export quotas to the EU and Japan.

Section 301 allows the United States Trade Representative, part of the executive branch, to investigate and remedy trade problems. In 2020, Trump imposed and Biden has continued huge tariffs on specific types of products from China, including semiconductors, lithium-ion batteries, electric vehicles, certain minerals, ship-to-shore cranes, medical equipment, and an extra levy on steel and aluminum. 

 How Trump’s tariffs could affect the GDP, job growth

In addition to CTA and TPW, other economists believe that the proposed Trump tariffs would result in significantly higher consumer prices for electronics. They also predict that the additional costs would not create a significant number of U.S. jobs, but they would harm U.S. exports and reduce the country’s overall GDP.

Erica York, senior economist and research director at the Tax Foundation, a nonpartisan organization that promotes growth-friendly policies, recently wrote an article stating that “former President Donald Trump’s proposals to impose a universal tariff of 20% and an additional tariff on Chinese imports of at least 60% would spike the average tariff rate on all imports to highs not seen since the Great Depression.”

The Tax Foundation estimated that a 10% general + 60% China tariff would lower GDP by 0.8%. If the general tariff were 20% – the higher end of Trump’s original proposal – the estimate rises to 1.3%. Including a possible 10% retaliatory tariff from other countries brings the GDP drain to 1.7%. The group also estimates that the tariffs and retaliation would cost 1.4 million full-time jobs over time.

The Coalition for a Prosperous America (CPA), a non-profit organization that advocates for more domestic production, takes a different view. In July, it published an analysis claiming that a universal 10% tariff (not a 20% tariff and not a China-only, 60% tariff) would boost GDP by 2.86% and create 2.8 million jobs. The organization also proposes that, with the tariffs collected, the Federal government could afford to and would give significant tax refunds to low- and middle-income Americans who would then see their household incomes rise. CPA makes no claims about electronics prices specifically.

In September, TPW published a rebuttal to the CPA’s analysis saying that the CPA model incorrectly assumes that tariffs will raise U.S. productivity and that other countries’ retaliatory tariffs are not a factor. TPW also argues that the U.S. does not have a large enough surplus of labor and capital to suddenly divert new workers and investment into all the many tariffed industries.

“There is no question that tariffs impose a cost on the economy,” York said.”They’re not just economically costly because of their distortions for economic activity, however, but they also impose costs by increasing trade tensions, hurting our allies, and, on the scale Trump is proposing, leading to massive disruptions.”

Trump considering even higher tariffs

Speaking of disruptions, Trump may want to implement tariffs that are much higher than 10 or even 20%. During an interview this week at the Chicago Economic Club, the GOP candidate told Bloomberg News Editor-in-Chief John Micklethwait that 50% tariffs would be more effective in getting companies to move their manufacturing operations to the U.S.

“If you want the companies to come in, the tariff has to be a lot higher than 10%, because 10% is not enough,” Trump said to Micklethwait. “They’re not going to do it for 10. But you make a 50% tariff, they’re going to come in.” 

Do tariffs help or hurt? 

Christine McDaniel, senior research fellow at George Mason University’s Mercatus Center, agrees that new tariffs would lead to disruptive price increases. “Whether it’s a 60% tariff, 10% tariff or 2000% tariff, it is going to raise prices,” she told Tom’s Hardware. 

McDaniel recently wrote a paper with University of Nebraska’s Edward J. Balistreri called “Waging a Global Trade War Alone: The Cost of Blanket Tariffs on Tariffs on Friend and Foe.” In the paper, the authors predict that if the U.S. institutes a 60% tariff on China and China retaliates (a likely scenario), consumers and industry would lose $665 billion in purchasing / producing power. 

McDaniel said that, while she doesn’t know exactly what Trump and his team have in mind, it’s possible that they may be using the threat of tariffs to get some concessions from other countries that they want.  

“Another thing to keep in mind is that he’s a deal maker,” she said. “And you may or may not like the deals he makes, but if you are that kind of deal maker, you often want to start out with way more than you think you could get . . . for leverage.”

McDaniel noted that Trump is obsessed with the trade balance and seemingly wants to use tariffs to make the U.S. a net exporter of goods. However, she posited that tariffs will not increase exports and that reducing or eliminating the trade deficit is not necessarily desirable because it won’t improve the overall economy. She noted that, when the U.S. has had a healthy economy with lots of domestic consumption and foreign investment, there’s been a trade deficit. When there’s a recession and consumers spend less, there’s a trade surplus. 

She also noted that tariffs can end up hurting the ability of American manufacturers to be competitive, costing jobs. To back up her point, McDaniel cited the example of InSinkErator, a U.S. company that makes in-sink garbage disposals. She says the company suffered when the price of the steel and aluminum it needs to make its products went higher after Trump’s 2018 steel tariffs. 

“It’s clearly the case that those steel tariffs cost way more than they helped,” she said.

Some of Trump’s own party leaders, who support his bid for president, are also not fans of his tariff proposals. “I’m not a fan of tariffs,” Senate Minority Leader Mitch McConnell told reporters in September. “They raise the prices for American consumers. I’m more of a free-trade kind of Republican that remembers how many jobs are created by the exports that we engage in. So, I’m not a tariff fan.”

Perhaps McConnell hopes that Trump’s tariff talk, as he suggested, is just a negotiating tactic or hyperbole designed to draw support from those who want to increase American manufacturing at all costs. However, if Trump wins the U.S. presidential election and then follows through with even the smallest of his proposed tariffs, you can expect to pay more for your next laptop, smartphone, tablet, TV or PC than you do today.

Source link

#Trump #tariffs #increase #laptop #prices #electronics

Pelican News

Source Link