As Trump threatens more tariffs on China, tech and manufacturers hold breath

How to Watch Trump State of the Union
AFP/Getty Images

Fresh off an apparent victory in his trade scuffle with Mexico, President Donald J. Trump ratcheted up his ongoing trade war with China on Monday. Trump warned in a CNBC interview that if China President Xi Jinping fails to appear at the G-20 summit later this month in Japan, he’ll immediately slap an additional $300 billion in tariffs on Chinese imports, which could be bad news for the technology and manufacturing sectors.

So far, China has not confirmed Xi’s attendance at the G-20 meeting. Chinese Foreign Ministry spokesman Geng Shuang also declined to confirm a meeting between the two leaders to reporters at a daily news briefing in Beijing on Monday, according to Reuters. “If there is concrete news on this, China will release it in a timely manner,” Geng said.

It’s not clear whether the Reuters report was the reason why Trump called CNBC on Monday to defend his position. Regardless of his impetus, Trump made his position clear. “We’re expected to meet, and if we do that’s fine, and if we don’t — look, from our standpoint, the best deal we can have is 25% on $600 billion,” he told CNBC.

The new tariffs would mean nearly every imported good from China would be taxed. “If we don’t have a deal and don’t make a deal, we’ll be raising the tariffs, putting tariffs on more than — we only tax 35% to 40% of what they said, then they had another 60% that’ll be taxed,” Trump added.

Manufacturing and tech stand to lose

Trump’s latest threats could spell real trouble for American manufacturing and tech, which are already feeling the pinch of the more than $200 billion in tariffs placed on Chinese imports last month. A long-term trade war between the two nations where the new tariffs take effect could raise the price of an iPhone by as much as $160, some analysts estimate, and everything from computers to appliances could jump in price over the next few months.

The trade tiff is also spooking businesses: Just 75,000 new jobs were added in May, well below analyst estimates of 180,000 and a far cry from the 224,000 added in April. Worse yet, the solid job numbers from March and April were revised downward, tempering optimism that the U.S. economy was weathering Trump’s tariff threats well.

Experts warn that there is cause for worry, especially if the tariffs continue longer-term, as consumers will end up paying more for the tech they buy. China supplies a large number of computing hardware to the U.S., which may become more expensive if manufacturers decide to protect their profit margins. Prices for consumer appliances have already begun to rise, and retailers including Walmart, Macy’s, and Costco have all warned of impending price increases on a wide range of products, both tech and non-tech.

“Trump’s belief that trade wars are easy to win is ill-informed,” Michael Sury, finance lecturer at the University of Texas at Austin, told DigitalTrends. “So too is his overly simplistic belief that the application of tariffs amounts to a tax on the Chinese.”

Price hikes won’t be uniform, and will be difficult to predict

Sury says that whether or not prices will rise on any given item will depend on its novelty in the market. The concept is called “elasticity,” a particular product’s capability to maintain demand in the event of a change in price. Foreign goods that are in high demand without many substitutes are considered “inelastic.” In this case, it’s likely much of the tariff, whether 5, 10, or 25 percent, will be passed nearly in its entirety to the consumer.

However, goods where substitutes can easily be sourced elsewhere may see much more modest increases, if any at all. Sury told DigitalTrends that figuring out which tech might become more expensive as a result of Trump’s tariffs is difficult, however. “It is a pretty broad category that can encompass generic products, white-labeled devices, as well as specific brand names that garner real consumer loyalty,” Sury said.

“As a whole, these products tend to be viewed as discretionary items where purchase decisions can be put off, or where there may be other substitutes that are acceptable,” he explained.  “However, with so much technology manufacturing coming out of China, in many instances it may be hard to find acceptable substitutes.”

Because of this, if you’re planning a large electronics purchase such as a computer or new kitchen appliance, it might actually be wise to purchase it as soon as possible to limit your exposure to possible price increases.

Tech companies need to think long-term

Other experts say that the industry as a whole needs to think long-term when it comes to China. With the 2020 election looming, there’s not much reason to believe that Trump’s trade strategy will measurably change over the remaining 19 months of his current term. It may be time to reconsider manufacturing so much of our tech in China.

“Longer-term, U.S. corporations could try to compensate by moving some production out of China. Some will come back to the U.S. However, some will go to other countries like Vietnam,” tech entrepreneur Vaclav Vincalek told DigitalTrends. Vincalek says productivity is flat in China amid rising costs, so some tech manufacturers have already left the country.

Tariffs may accelerate this move away from using Chinese labor for manufacturing. ” If the duties are here to stay, the vendors will do a spreadsheet calculation and find another location where they can manufacture their goods,” he explained.

But in the short-term, we all should be prepared for some kind of increase across a wide variety of tech goods, as these strategy shifts will take time to implement. This means both manufacturers and consumers will likely find themselves contending with the effects of Trump’s trade policy as soon as this summer — as will the overall economy.

“These increased costs translate into lower purchasing power for both value-added resellers and end consumers,” Sury said.  “That puts a damper on growth.”


It’s tough to buy a fully American-made car, but here’s 15 that come close

In the age of global supply chains, tariffs, and multinational companies, what does it mean to be American-made? The traditional answers no longer apply, and the vehicles with the most American content may surprise you.

Laptop buyers will pay the price in the China-U.S. trade war

With the US-China trade war only increasing in intensity, it is becoming more and more likely that US consumers will pay for it in the form of increased prices on consumer tech, including laptops, due to import tariffs.
Smart Home

Laundry taking forever? Dry your clothes faster with the best dryers of 2019

Dryers may be the afterthought when it comes to buying a laundry pair, but the best dryers should have key features that you want in your new appliance, whether it's sanitizing or energy efficiency.
Smart Home

The best washing machines of 2019, from front-loaders to those with smarts

It takes a special kind of person to love doing laundry, but the right machine can help make this chore a little easier. Check out our picks for the best washing machines on the market right now.
Emerging Tech

U.S. Navy is working on making its fleet invisible to computerized surveillance

The U.S. Navy’s ever-innovative Office of Naval Research is working on a way to turn the United States military fleet invisible. Well, to cutting-edge image-recognition systems, at least.

The MacOS Catalina public beta is live. Here’s how to download it

Apple's latest MacOS update, known as Catalina, is finally available for developer preview, which means if you're willing to pay a little for the privilege, you can be one of the first to try it out.
Smart Home

GE-backed startup brings crystal-clear ice to fans of bourbon and other spirits

Spherical, crystal-clear ice to water down drinks used to be the purview of innovative bartenders, but a startup called FirstBuild, backed by GE Appliances, has a new device that will produce it in mere hours.

Researchers sent a fake, unblockable presidential alert to a 50,000-seat stadium

A group of researchers was able to send out fake, unblockable presidential alerts to phones in a 50,000-seat football stadium. The team from the University of Colorado Boulder figured out a way to spoof the alert and send it out.

Cyberpunk 2077 will feature romance options beyond heterosexual relationships

CD Projekt Red’s upcoming Cyberpunk 2077 will feature a gender-fluid character creator, and the game’s lead quest designer reveals that the romance options will be more diverse than The Witcher 3's.

Apple’s new Seattle campus may mean big things for Siri, artificial intelligence

Apple plans to hire 2,000 more employees for a new Seattle campus, the company announced Monday, with a significant number of those jobs focused on Siri and artificial intelligence.

Check out the best new gear from the Summer Outdoor Retailer 2019 convention

At the 2019 summer Outdoor Retailer convention in Denver, Colorado the top gear manufacturers revealed the latest and greatest camping, hiking, and backpacking products to keep us safe and comfortable.
Emerging Tech

How to watch SpaceX’s most difficult Falcon Heavy launch ever

SpaceX will launch a Falcon Heavy rocket Monday evening in its most challenging launch yet. The launch is scheduled for Monday June 24 at 8:30 p.m. PT, but is dependent on weather conditions. You can watch NASA's livestream with coverage…

U.S. firm plans to power soccer stadiums using aging Nissan Leaf batteries

We've heard of aging EV batteries being repurposed to power homes and other facilities, but how about an entire sports stadium? An American firm is already doing just that, and now has plans to expand its system across Europe.

Amazon announces Prime Day 2019 date: Prepare for 2 days of deals

The once one-day event is slated to span a whole 48 hours, with the best deals beginning as early as midnight on Monday, July 15, and carrying on through July 16. This is the longest Amazon Prime Day ever.