In 2019, the US heavily relied on China for its electronic imports, with an overwhelming majority of video game consoles, smartphones, laptops, tablets, and monitors sourced from Chinese manufacturers. As China remains the leading supplier of electronic products to the US, totaling $146 billion in imports by 2023, the industry faces ongoing challenges due to tariffs imposed during the Trump administration. Businesses like Deena Ghazarian's Austere have felt the impact of these trade policies, which introduced a 25% surcharge on imported cables and components. As the current US president targets other major suppliers like Mexico, the global electronics market braces for possible retaliatory tariffs.
In 2019, China was the origin for 87% of video game console imports to the US. Similarly, 78% of smartphones and 79% of laptops and tablets imported into the country were sourced from China. Additionally, two-thirds of monitors imported to the US also came from Chinese manufacturers. This dependency highlighted the vulnerability of US tech firms when tariffs were imposed by President Donald Trump.
The impact on businesses was immediate and profound. Deena Ghazarian's company, Austere, which had only been operational for a year, was plunged into turmoil as a consequence of these trade policies. She expressed her concerns at the time:
"I literally thought I am going to start and end a business in less than a year" – Deena Ghazarian.
The tariffs resulted in a 25% surcharge on every cable and component her company imported. This financial burden forced her to reconsider pricing strategies:
"There is a price point where the customer is satisfied with the value of goods provided" – Deena Ghazarian.
"The moment I shift above that I start to lose customers" – Deena Ghazarian.
While domestic manufacturing in the US has increased partly due to tariffs, higher costs and stricter regulations limit its expansion. The potential for increased global prices looms as China may need to relocate manufacturing operations to countries with elevated labor costs. Taiwanese firm Acer has already indicated a likely 10% price rise in its laptops due to existing duties on Chinese imports.
The Consumer Technology Association (CTA) has voiced concerns about the impact on American businesses and consumers. Ed Brzytwa, vice president of international trade at CTA, stated:
"US importers have to pay these taxes not the exporters" – Ed Brzytwa.
"It's American businesses and consumers who will suffer" – Ed Brzytwa.
This sentiment is echoed across the industry as companies like HP warn of lower profits due to these tariffs. Corie Barry, CEO of Best Buy, highlighted that:
"the vast majority" of the new tariffs will "probably be passed on to the consumer" – Corie Barry.
The landscape may further shift as the current US president plans to impose "reciprocal tariffs" on other major trading partners. With Mexico now in the crosshairs as another significant electronics supplier, the global market anticipates potential retaliatory measures that could exacerbate tensions and disrupt supply chains further.