American technology companies feel pinches of China’s tariffs

Deena Ghazarian had only been in the business for a year when the commercial policies of President Donald Trump’s first mandate sent her company to a tail.

It was 2019 and his signature based in California, Austere, had just agreed to supply several large retail retail accessories and high -end video accessories that are largely manufactured in China.

Then, Trump imposed radical tariffs on China, and during the night, Deena found a 25% surcharge in each cable and component that imported, above zero previously.

She was forced to absorb costs and for a while she thought she would break.

“I literally thought I was going to start and finish a business in less than a year,” she says. “I had spent all this time, money and effort, and have something like this blind that was shocking.”

The firm crossed, but like many other US companies, it is now in a surprisingly similar situation.

Since he returned to office in January, Trump has raised tariffs on all goods imported from China by 20%, and has put 25% taxes in Canadian and Mexican products, only to delay some of them until April.

The president says he wants to force these countries to do more to stop illegal and migrants flows to the United States, bring more manufacturing to the United States and address what he sees as unfair commercial imbalances.

But the duties are much broader in the scope than last time, when gradually in graduation and exemptions were granted.

Products such as smartphones, desktop computers and tablets are now incurring rates for the first time, while taxes on others have risen more.

“American importers have to pay these taxes, not exporters,” says Ed Brzytwa, Vice President of International Trade of the Association of Consumer Technology (CTA), an American commercial body that represents more than 1,200 technological companies.

“It is US companies and consumers who will suffer.”

Companies such as Mrs. Ghazrian are particularly exposed. China remains the number one supplier of electronic products to the US., With imports for a total of $ 146 billion (£ 112 billion) in 2023, According to official data.

Meanwhile, 87% of American video game console imports come from China that year, 78% of smartphones, 79% of laptops and tablets, and two thirds of monitors, The CTA says.

While many US companies such as Austere have diversified their China supply chains from the first term of Trump, countries like Thailand, Taiwan and Vietnam still do not offer the same manufacturing and experience capabilities.

At the same time, the president of the United States now addresses Mexico, another important electronics provider. And although national manufacturing in the US has increased, partly due to tariffs, it is still limited by higher costs and stricter regulations.

“Yes, Apple now manufactures some iPhones in India and (the Taiwanese chip manufacturer) TSMC has been diversifying for Arizona,” says Mary Lovely, the main member of the Peterson Institute in Washington DC.

“But China remains a massive part of the supply chain. Relationships with new suppliers take time to develop, they are expensive to develop.”

The research suggests that companies transmit a great proportion of tariff costs by increasing prices. Earlier this month, Corie Barry, head of the American electronics retailer Best Buy, said that the “vast majority” of the new rates “will probably be transmitted to the consumer” because industry suppliers have such small margins.

In February, Taiwanese firm Acer said that the price of its laptops would probably increase by 10% depending on the 10% tasks in China at that time, while the US group HP warned that their profits would be lower due to rates.

Mrs. Ghazrian says she can have to raise her prices this year, but she worries that she can be counterproductive. “There is a price in which the customer is satisfied with the value of the goods provided.

“At the time I change above that I begin to lose customers. High inflation has pressed Americans.”

During Trump’s first mandate, companies like Apple obtained successful exemptions for products, and we can still see the talas.

Experts have also suggested that Trump sees tariffs as a negotiation tactic and could relieve them if he gains concessions, as he did when China agreed to buy more American products in an agreement reached in 2020.

Fears of an economic deceleration of the United States I could also change course.

However, for the moment, tensions are likely to intensify. China, Mexico and Canada have promised to take reprisals against the duties of the United States that impose them, and this week Trump threatened with double tariffs on steel and Canadian aluminum only to row at the last minute.

He plans to impose “reciprocal rates” soon on the rest of the world, and threatened tariff increases up to 60% in Chinese products while in the campaign.

There is a risk that this could increase the price of technological goods worldwide if China is forced to relocate manufacturing in countries where labor costs are higher. In addition, countries can resort to tariffs on imported technology from the United States.

Mrs. Ghazrian says she is worried, but at least she is prepared this time. Like many other US business owners, their additional inventory ordered bulk before Trump assumed the position, and is storing it in his warehouse on the east coast.

She hopes that the company will be next year until you can “pivot” again.

“That could mean finding a more profitable way to produce the product or do something completely different. It is frustrating that I have to concentrate on survival instead of growing my business.”