top of page
  • tech360.tv

New China Tariffs to Increase Prices of Consumer Electronics

New tariffs on Chinese imports will increase prices for consumer electronics. The tech industry has been dealing with a surge in demand but faces semiconductor manufacturing bottlenecks. Tariffs on chips, batteries, and steel/aluminum will drive up costs for consumer electronics.

However, semiconductor manufacturing has become a significant bottleneck, affecting everything from Wi-Fi routers to cars. While supply and demand have started to align, with some over-supply of chips for certain applications, there are still constraints in areas like Graphics Processing Units (GPUs) and high-bandwidth memory (HBM) for data center AI applications. Overall, the electronics industry seemed to be moving towards more moderate and predictable growth. Unfortunately, the recent tariffs imposed by the US under Section 301 of the Trade Act of 1974 will disrupt this progress.


The new tariffs, amounting to $18 billion on Chinese imports, include the following:


- Tariffs on batteries, which will be phased in over the next few years, impacting electric vehicles (EVs) first and other applications later.

- Tariffs on chips, batteries, and steel/aluminum, which will drive up prices for consumer electronics.


These tariffs are likely to further escalate the trade war, leading to increased costs not only for materials used in consumer electronics but also for electronics assembly in China. This will have a negative impact on the entire tech industry, from consumer electronics to appliances and automotive, as they struggle to cope with higher labor, material, and device costs. The question arises: what is the benefit of these tariffs? China has already subsidised its industries to the point where it has the capacity to meet more demand than it can consume domestically.


In the case of solar cells, China's capacity has exceeded global demand for a short period. However, history shows that tariffs only delay the inevitable. While the western world still holds a lead over China in semiconductors and is investing in new capacity and intellectual property, the broader electronics industry heavily relies on China for battery cells and assembly. Although efforts have been made to diversify resources globally and reduce China's impact on the electronics supply chain, it will take at least another decade to fully mitigate this dependence. Therefore, having a competitive semiconductor segment will be of little benefit if the rest of the electronics industry becomes entangled in a trade war that negatively affects the global supply chain.


Tirias Research predicts that these new tariffs, while politically motivated, will have a negative impact on the semiconductor and electronics industries, as well as global GDP, starting in late 2024 and for the duration of their implementation. The extent of this impact will depend on China's inevitable retaliation. It is crucial to remember that a chain is only as strong as its weakest link. In the electronics industry, this could be a single semiconductor material or component, as seen in the tantalum shortage that limited capacitor supplies in 2000.


Creating a level playing field through tariffs is a complex and delicate task that must consider the full ramifications across the value chain. Unfortunately, when this balance is not achieved, it is the consumer who ultimately bears the cost. In this case, the tech industry will also suffer the consequences.

 
  • New tariffs on Chinese imports will increase prices for consumer electronics.

  • The tech industry has been dealing with a surge in demand but faces semiconductor manufacturing bottlenecks.

  • Tariffs on chips, batteries, and steel/aluminum will drive up costs for consumer electronics.


Source: FORBES

As technology advances and has a greater impact on our lives than ever before, being informed is the only way to keep up.  Through our product reviews and news articles, we want to be able to aid our readers in doing so. All of our reviews are carefully written, offer unique insights and critiques, and provide trustworthy recommendations. Our news stories are sourced from trustworthy sources, fact-checked by our team, and presented with the help of AI to make them easier to comprehend for our readers. If you notice any errors in our product reviews or news stories, please email us at editorial@tech360.tv.  Your input will be important in ensuring that our articles are accurate for all of our readers.

bottom of page