The U.S. is preparing for heavier tariffs on Chinese goods. Credit: Shutterstock
President Donald Trump and his administration’s proposed expansion of tariffs of 25 percent onto roughly $300 billion worth of imports from China has caused the tech industry to respond. The latest round of tariffs may include a number of tech items, including laptops, tablets, headphones, keyboards, solid state drives and more.
Several technology companies, vendors and retailers made their thoughts known in public comments to the Office of the United States Trade Representative (USTR). This is during a period of public hearings taking place from June 17 through June 25.
The tariffs, if approved as is, could go through this year, in time for the holiday and back to school shopping season.
Here’s what we know about the tariffs so far:
What gadgets do the tariffs affect?
The tariffs are wide-ranging and affect many industries, including technology, agriculture, clothing and metals. There are hundreds of product categories listed on the website for the Harmonized Tariff System (HTS) of the United States. You can read the full list of the latest round of tariffs here.
|HTS Subheading||Description||This could affect...|
|8471.30.01||Portable automatic data processing machines, not over 10 kg, consisting at least a central processing unit, keyboard and display.||Laptops, tablets|
|8471.49.00||ADP machines, nesoi, entered as a system (consisting of a central processing unit, an input unit, and an output unit).||Desktops, All-in-ones|
|8471.60.20||Keyboards for automatic data processing machines not entered with the rest of a system.||Keyboards|
|8507.60.00||Lithium-ion batteries.||Batteries, external batteries, battery cases|
|8517.12.00||Telephones for cellular networks or for other wireless networks.||Smartphones|
|8517.62.0090||Machines for the reception, conversion and transmission or regeneration of voice, images or other data, nesoi.||Routers, NAS devices, smart speakers, smartwatches|
|8517.70.00||Parts of telephone sets; parts of other apparatus for the transmission or reception of voice, images or other data, including apparatus for.||Repair parts, especially for smartphones|
|8518.30.20||Headphones, earphones and combined microphone/speaker sets, other than telephone handsets.||Wired headphones and headsets|
|8523.51.00||Semiconductor media, solid state non-volatile storage devices.||Flash memory, solid state drives, USB sticks, SD cards|
|8528.52.00||Other monitors capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471.||Flat-panel monitors|
|8528.72.64||Color television reception apparatus w/flat panel screen, video display diagonal over 34.29 cm, incorporating a VCR or player.||Flat-panel televisions|
|9504.50.00||Video game consoles and machines, other than those of heading 9504.30.||Video game consoles|
Other technologies, including discs, batteries, cameras and projectors also appear on the list in various forms. And, CPU fans, processors (8542.30.01) are also scheduled.
What do tech companies think?
An HP Spectre x360 laptop. Credit: Tom's Hardware
A number of tech companies have commented on the tariffs publicly, and they all have expressed a wish for, unsurprisingly, categories affecting their businesses to be removed from the list.
Companies that have commented include:
Nintendo of America
Sony Interactive Entertainment
Two notable joint comments have also been written. The first was one from Intel, HP, Dell and Microsoft regarding laptops while another came from Nintendo of America, Microsoft and Sony Interactive Entertainment about the effects on video game consoles.
All of the comments have some commonalities. Many mention the costs of moving existing supply chains out of China to either the United States or other countries in Asia. Additionally, they point out that companies that do not serve the United States as a primary customer base could gain a competitive advantage, as well as brands outside of the United States. (Fitbit, for example, suggested Xiaomi and Huawei would be strengthened as it was affected.)
Additionally, many mention thin margins and the possibility of pushing costs to consumers, especially on low-end, low-priced electronics.
What does this mean for prices?
Xbox One S. Credit: Shutterstock.com
The Consumer Technology Association, a group representing technology companies, commissioned a study suggesting that the U.S. price of cell phones would rise 14%, video game consoles and laptops would each increase 19%. The price of drones would jump 15%.
In its own public comment, the Entertainment Software Association, which represents the video game industry, wrote that: “the imposition of a 10% tariff rate could place these products out of reach for many consumers – let alone a 25% tariff, which would have an even greater impact, likely causing consumers to purchase fewer consoles, controllers and accessories. This is because console makers will be unable to absorb the tariffs.
Many of these companies suggested prices could go up in their own comments, insisting that they wouldn’t be able to handle the costs.
Why is the government considering implementing tariffs?
In August of 2017, the USTR began investigating the practices of the Chinese government. The investigation included policies and action regarding intellectual property, technology transfer and more.
The USTR and the office of President Donald Trump have deemed China’s policies as restricting commerce in the United States and “unreasonable or discriminatory.”
Due to that, they deemed China’s policies fall under section 301(b) of the Trade Act of 1974, which authorizes the President to take such action.