US tech firms feel pinch from China tariff

Deena Ghazarian was in business for only one year when the business policies of President Donald Trump’s first term of office sent his company to a telpin.

It was 2019 and its California-based firm, Oster, agreed to supply several large American retailers with their high-end audio and video accessories that are largely built in China.

Trump then imposed a sweeping tariff on China, and Dena paid himself 25% overload on every cable and component overnight, which he imported – first by zero.

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

“I really thought that I am going to start and finish a business in less than a year,” she says. “I had spent all this time, money and effort, and you were shocking to do something with this blind.”

The firm drawn through it, but like many other American businesses, it now finds itself in a similar position.

Since returning to the office in January, Mr. Trump has increased tariff by 20% on all goods imported from China, and has put 25% taxes on Canadian and Mexican products, only to delay some of them by April.

The President says that it wants these countries to address more manufacturing and more manufacturing to the US to prevent the flow of illegal drugs and migrants in the US and to address what he sees as inappropriate business imbalance.

But duties are much wider than last time, when they were gradually phased out and many products were exempted.

Its goods like smartphones, desktop computers and tablets are now provoking tariffs for the first time, while others have climbed more taxes.

“American importers have to pay these taxes, not exporters,” Ed Brajitwa, Vice -Chairman of International Trade at the Consumer Technology Association (CTA), says in an North American trade body, which represents more than 1,200 technical firms.

“These are American businesses and consumers who will suffer.”

Businesses like Ms. Ghazerian are particularly exposed. China is still the number one supplier of electronic products for the US, with an import of $ 146BN (£ 112bn) in 2023, According to official data.

Meanwhile, 87% of American video game console imports came from China that year, 78% smartphone, 79% laptops and tablets, and two-thirds of monitor, CTA says.

While many American companies such as Oster have separated their supply chains from China since the first term of Shri Trump, countries such as Thailand, Taiwan and Vietnam still do not still offer uniform manufacturing capabilities and expertise.

At the same time, the US President is now targeting Mexico – another major electronics supplier. And while domestic manufacturing in the US has increased, due to partially tariffs, it is still limited by high cost and strict rules.

Mary Lovely, a senior partner at the Washington DC’s Peterson Institute, says, “Yes, Apple now creates some iPhones in India and (Taiwanese chipmaker) has been diverse for TSMC Arizona.”

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

Research suggests that companies pass prices at a large proportion of tariff costs. Earlier this month, US Electronics Retailer Best Bye Boss Bairy Barry said that the “vast majority” of the new tariff “will probably be passed to the consumer” because sellers in the industry have such small margins.

In February, the Taiwanese firm Acer said that the price of its laptop will increase by 10% on the basis of 10% of duties on China at that time, while the US group HP warned that the tariff will reduce its profit.

Ms. Gazerian says that she may have to increase her prices this year, but worry that it may be a backfire. “There is a price point where the customer is satisfied with the value of the goods provided.

“The moment I shift up that I start losing customers. High inflation has squeezed Americans.”

During the first term of Mr. Trump, companies such as Apple successfully exempted the products, and we can see the carving-outs yet.

Inner sources have also suggested Tarf as a strategy of a conversation and if he wins the concessions, they can rest, as they did when China agreed to buy more American goods in a deal in 2020.

Fear of US economic recession It can also make a change course.

For some time, however, stress is likely to increase. China, Mexico and Canada vowed to retaliate against any American duties levied on them, and this week Mr. Trump threatened double tariffs to return at the last time only on Canadian steel and aluminum.

He is soon planning to impose “mutual tariffs” on the rest of the world, and threatens a tariff increase of up to 60% on Chinese goods on the campaign mark.

There is a risk that it can increase the price of technical goods worldwide if China is forced to move manufacturing in countries where labor costs are high. In addition, countries can return with tariffs on imported US technology.

Ms. Gazerian says she is worried but at least she is ready this time. Like many other American business-owners, he bulked the additional inventory before taking over to Mr. Trump, and is storing it in his East Coast Warehouse.

He hopes that the company will get through next year until it could “pive” again.

“This may mean finding a more cost-affected way to produce the product or to separate something completely. It is disappointing that I have to focus on existence rather than increasing my business.”