Is There an End in Sight? Trade War Has Cost U.S. Electronics Companies at Least $10 Billion

Global September 9, 2019

The United States and China are currently in a months-long trade war, with seemingly no end in sight. Although the two countries have agreed to trade talks in October, the general feeling is that the sit down may not end in either party calling a truce.

Unfortunately, the unending standoff has negatively affected companies in the US, and consumers won’t be left out either. As of September 1^st, electronics companies importing merchandise from China will have to pay a previously non-existent tax of 15% to the government.

Why so? President Trump’s administration is imposing tariffs on imports brought in from China, in a bid to discourage U.S. companies from doing business with the country. Unfortunately, you can’t wake up and change their way of doing business overnight.

President Trump is imposing tariffs on imports brought in from China

The Consumer Will Meet the Expense

As such, they will most likely continue importing goods from the East Asian giant economy, then trickle down the taxation expense to the consumer. TVs, speakers, drones, AirPods, name them – they’ll all have a marked increase in price, thanks to the tariffs recently imposed.

Speaking about the situation, Consumer Tech Association’s (CTA) spokesperson Bronwyn Flores said that although said products may not immediately hike in price, consumers will start feeling the pinch by November.

This year’s Black Friday may not be as you’ve been anticipating, so she advises that the sooner you can buy your electronics, the better for you. Come holiday season, we’ll have gotten used to seeing these new prices, Flores confirmed.

In case you didn’t know, these recent tariffs aren’t the only ones to be imposed against items from China. They date back to July 2018 and have cost the electronics industry at least $10 billion, as CNBC reports.

To even worsen the situation, CTA raises concerns that these new tariffs differ from their predecessors in that they are targeting finished products. Previous ones were imposed on various components required to make said finished goods, but the latest move by the government is doing more harm than good, and especially by hurting consumers.

List 4a

These new tariffs have been dubbed “List 4a” by trade experts, and they estimate that they affect consumer goods worth at least $52 billion. What’s more, not even the largest U.S companies are safe.

Apple Inc., which assembles most of its products in China, will have a number of its products affected by the 15% tax. It seems that not even the almost perfect relationship the company has with President Trump’s administration will save it from the tariffs.

Tim Cook (Apple CEO) in conversation with POTUS. Their relationship won’t affect the company from tariffs though.

And although the taxation affects all electronics companies in the States, Apple has become almost by default the poster child in this issue. Why wouldn’t it, when the company employs at least 1.4 million Chinese workers, and registers a drop in stock whenever the President tweets anything related to the China trade war?

In June, the company tried to negotiate with the government to avoid being affected by the tariffs, although things didn’t go their way. In a letter sent to those in authority, Apple argued that those due for implementation come September would affect all of their major products, and consequently reduce the company’s contribution to the US economy.

Apple’s major products are affected by the tariffs

All the same, financial experts predict that Apple may, instead of adjusting the prices of its products upwards, absorb whatever costs the tariffs bring with them.