Proposed tariffs on Chinese printed circuit assemblies and connected devices could cost the U.S. economy $520.8 million and $2.4 billion annually for the 10 percent and 25 percent tariffs, respectively, the Consumer Technology Association (CTA) found in a new study.
The economic impact study commissioned by CTA showed that shoppers will have to pay between $1.6 billion and $3.2 billion more for connected devices, including things like gateways, modems, routers, smart speakers, smartwatches, and other Bluetooth enabled products. The price of those products imported from China will increase by between 8.5 percent and 22 percent, while the prices for products from all sources will rise by between 3.2 percent and 6.2 percent, CTA reported.
As for the printed circuit assemblies from China, CTA found that prices in that market could increase by between 9 and 23 percent, while similar products from other U.S. manufacturers could increase in price by 2 to 3 percent higher. As a result of those higher input costs, which would total an additional $900 million to $1.8 billion, American manufacturers of products that contain those printed circuit assemblies will purchase between 6 and 12 percent less from suppliers, CTA said.
“With the economy thriving under President Trump … the administration shouldn’t jeopardize America’s global standing with tariffs,” Gary Shapiro, CEO and president of CTA, said in a statement. “Foreign governments don’t pay the cost of tariffs, Americans do – and for that reason, U.S. trade policy needs to steer clear of tariffs that act like taxes on American manufacturers and consumers.”
According to CTA’s findings in its most recent U.S. Consumer Technology Sales and Forecasts report, if the administration were to enact tariffs of 10 and 25 percent, 2019 U.S. shipments of connected devices such as fitness trackers, smartwatches, wireless headphones, modems and broadband gateways, wireless earbuds, and smart speakers would decline by as much as 12 percent Additionally, shipment revenues for those devices would decline by as much as 6.5 percent next year, CTA said.
The impact extends beyond just the cost of goods, however. CTA Vice President of International Trade Sage Chandler sat down for an interview with Dealerscope for an upcoming podcast episode to discuss the impacts of these Chinese tariffs.
“It’s the small businesses the mom and pop stores, the startups, the innovators that are going to feel this the fastest.,” Chandler said. “That's because they're lean, they don't have a lot of places to trim from if costs go up. So they will have to make the hardest decisions quickly.”
One such small business, JLab, recently spoke with Dealerscope about the broader implications of the proposed tariffs on the company. CEO Win Cramer told us that his wireless audio startup, which has transformed into the fastest growing brand in the category, could see major implications when it comes to their product roadmap.
“Where we usually build product roadmaps out 12 to 18 months, we're going to start to tune those down to six to nine month windows so we can say, 'Hey, you know, we thought our cost would be X. Now it could be Y. Can we compete with the good in the marketplace now that we have potentially a 10 percent higher cost?’” Cramer said. “My biggest fear is the disruptors—and I use that term humbly—but the folks that are coming in and trying to become the next Sony or trying to become the next Apple, and they are taking some risks from a product development perspective that those other larger companies wouldn't necessarily take because they're too conservative—I think folks like us are going to be a little more hesitant to do that.”