Skip to main content

From GoPro to Lenovo, Trump tariffs would have raised prices on tech from Mexico

Volkswagen AG’s plant in Pueblo, Mexico. Volkswagen AG

President Donald Trump’s now-scrapped plan to impose a 5% tariff on Mexico starting Monday could have made a major impact on the cars and tech Americans love.

The impacts may seem less obvious than the tariffs the Trump administration imposed on China in early 2018. Americans depend on Chinese manufacturing for products like iPhones, computers, and TVs, as well as the components inside. But Mexico is a major producer of cars sold in the U.S., along with computers and electronic parts.

Mexico is second to only China in the number of computers it exports: GoPro will manufacture U.S.-bound devices in Guadalajara later this year. Foxconn, which manufactures a ton of brand-name tech products, has multiple factories in the country, and Universal Electronics will soon move remote control manufacturing from Mexico to China.

Tech manufacturers are likely happy that the tariffs aren’t going to happen (for now). Trump tweeted Friday that the U.S. had reached an agreement with Mexico in order to stop the tariffs, though he did not give specifics on the deal.

Trump initially said he’d increase the tariff by 5% a month, to a maximum of 25% by October 1. Such punitive measures would have had far-reaching effects and American consumers would likely foot the bill on a variety of tech products.

That said, deals like this are fickle and tariffs could still come in the future. Here’s how an escalating U.S.-Mexico trade war would impact tech:

The Biggest Loser: Automakers

Mexico’s largest export to the U.S. is in automobiles and auto parts. At $116 billion annually, a third of its exports are U.S. bound, according to Census Bureau statistics. Cars are where American businesses and consumers could feel the most pain. Thanks to free trade, automobile manufacturing often spans North America.

Take the modern Volkswagen Passat. Manufactured in Chattanooga, Tennessee, the engine is built at the automaker’s Silao, Mexico plant, but contains parts manufactured by partners across all three North American countries, as well as China and elsewhere. It’s incredibly difficult to find a car in the U.S. that’s completely manufactured here.

It’s important to mention that the level of exposure varies manufacturer to manufacturer. Volkswagen stands to lose the most because it imports nearly half of its automobiles sold in the U.S. from Mexico, Cars.com executive editor Joe Wiesenfelder told Digital Trends. But U.S.-based automakers have plenty to worry about too: Ford, GM, and Fiat Chrysler also import significant numbers of fully-manufactured cars back into the U.S.

This may be the biggest threat of Mexican tariffs. “Though the Chinese tariffs are a full 25%, they affect only two major models, SUVs from Buick and Volvo,” Wiesenfelder explained.  “If the proposed Mexico tariffs happen, they’ll start at 5% but will encompass both many assembled vehicles and countless auto parts.”

Wiesenfelder noted that all automakers with plants in the U.S. source parts from Mexican factories, so the effects could be much further reaching than some might expect.

If a deal falls through and tariffs eventually do take effect, the end result might be higher prices for new cars, but it’s hard to say if prices could rise in time for the 2020 model year. “If it turns into a standoff, however, I think it’s likely we’d see prices increase. Because so many brands are affected, it’s more likely the automakers will pass on some of the cost rather than absorb it indefinitely,” Wiesenfelder said.

Not good news for an industry with an already difficult market thanks to higher interest rates for many borrowers.

A U.S. Tech Manufacturer Sounds the Alarm

It’s not just automakers that are concerned. Illinois-based component and accessory manufacturer OWC says it has focused on bringing its manufacturing back to North America, but the threat of new tariffs poses a real threat to its business.

OWC manufacturers around 3,000 different products, ranging from hard drives to solid state drives, PC docks, memory kits, and even smartphone cases. With annual sales of $125 million, the company has done well by pairing its offices in Austin and Brownsville, Texas with its manufacturing facilities in Matamoros. But tariffs would threaten the future of this strategy, and he says both sides of the border will be affected — and people could lose their jobs.

While CEO Larry O’Connor told DigitalTrends that OWC could weather a short term 5% percent tariff on Mexican imports without an effect on its workforce or prices to the end consumer, the threat of higher tariffs is unacceptable.

“A longer-term 25% tariff on Mexican imports could be devastating to our business, our customers, and the hundreds of team members in Mexico,” he said. O’Connor lamented the uncertainty caused by the Trump Administration’s trade strategy, arguing businesses need ” a level of consistency and predictability to operate successfully,” and that a long-term tariff battle could spell trouble for his company’s plans.

“If the proposed tariff situation regarding Mexican imports is not resolved quickly, OWC will have no choice but to reconsider our overall North American manufacturing strategy,” he warned.

But it’s not just OWC that will be affected. Much larger companies stand to lose as well. Dell and HP manufacture their computers and other peripherals in Mexico: Cisco uses a Mexico-based partner for components. Apple uses at least three component suppliers with ties to Mexico, while Lenovo has multiple production lines in the country.

‘It’s possible for them to get hit twice’

Trump’s insistence on tariffs as a method of trade negotiation will have a compounding effect, say economic experts. James Cassel, co-founder and investment banker with Cassel Salpeter & Co says that some tech companies may find themselves dealing with new costs they hadn’t planned for, in multiple aspects of their business.

“With tech companies using an international supply chain, it is possible for them to get hit twice,” Cassel said. It’s common for components to be sourced from multiple regions — so your tech gadget might have a circuit board or other parts from China, but assembled in Mexico. It’s the nature of the globalized economy we live in. And it’s not like these companies can make major shifts overnight.

“I do not believe that companies, whether manufacturing tech gadgets or anything else, have had sufficient time to shift production to Mexico from China, if they did not already have production in Mexico prior to the tariffs,” he argued. In the short term, those costs are going to be eaten by these companies, and more likely passed along in the form of higher prices for a wide variety of products in the longer term as the trade war ravages on.

Like O’Connor, Cassel also took the Trump Administration to task over its seemingly haphazard trade policies, and the unpredictability it brings.

“What is really of concern is that we are being forced to play whack-a-mole where companies that produce tech components need to be ready to respond at any moment to another challenge that pops up,” Cassel said.

That’s the issue that many tech manufacturers seem to not have an solution for, and has many of them scrambling to contain the damage.

Topics
Ed Oswald
For fifteen years, Ed has written about the latest and greatest in gadgets and technology trends. At Digital Trends, he's…
Rivian R2 vs. Ford Mustang Mach-E: Will the R2 be a better buy?
Side of the Rivian R2

The Rivian R2 has finally been announced, and it could end up being the go-to EV for drivers who want a decently affordable electric car with a rugged look and feel. But when it finally launches to the public, it won't be the only option in its price range -- the Ford Mustang Mach-E could be one of its main competitors.

The Mustang Mach-E may not be quite as rugged-feeling as the Rivian R2, but it does have a lot going for it -- like an increasingly low price, sleek design, and comfortable interior. Is one of these EVs better than the other? We put the two head-to-head to find out.
Design
The first thing to note about the two cars is their design, as they’re pretty different. The Rivian R2 is built to be a little more rugged and outdoorsy, while the Mach-E instead has a sleeker and sportier look to it. Both cars look stylish and modern.

Read more
2025 Mercedes-Benz EQS sedan gets new face, bigger battery
2025 Mercedes-Benz EQS sedan front-quarter view.

The Mercedes-Benz EQS sedan arrived during the 2022 model year as the flagship of Mercedes' EV fleet. But now that it's been on sale for a few years, it's time for this flagship to get a refit so that it can stay competitive with other six-figure electric sedans like the BMW i7, Lucid Air, and Tesla Model S. The updated EQS sedan is scheduled to reach dealerships later this year as a 2025 model.

One of the most controversial features of the EQS has been its unorthodox streamlined shape, which makes the EQS one of the most aerodynamic sedans around, but also means it doesn't look much like a traditional Mercedes. For 2025, the EQS takes a step closer to that traditional look with a new grille featuring chrome bars like on the Mercedes S-Class. It also sports the brand's trademark hood ornament.

Read more
Best electric car charger deals: $100 off home charging stations
The handle of the Grizzl-E EV charger plugged into a vehicle.

A few years ago, electric vehicles were pretty rare or cost a fortune, but with more and more of the larger car brands getting into the game, there are a lot of excellent and even budget-friendly choices nowadays. That said, the electrical network for charging your cars might not be that widespread, so instead you'll have to rely on charging your car at home. Luckily, there are a lot of excellent car chargers at a discount, so if you've just bought an EV or want to upgrade your current charging solution, be sure to check out our favorite deals below.
Shockflo EV charger — $205, was $220

This EV charger by Shockflo is a Level 2 EV charger, which offers six times faster charging than a standard charger. It delivers 24 miles with just one hour of charging, and it can act as a mobile charger you can throw in the trunk or be mounted to a wall. It has an LCD display with useful information like charging rate, voltage, and charging time, as well as LED indicator lights that lets you know charging progress and errors.

Read more