Tariffs Could Impact Your Next Big Tech Purchase - Here's How
In just a few days, Donald Trump will take oath as U.S. president for a second time. The tech elite, including Meta CEO Mark Zuckerberg, Amazon founder Jeff Bezos, and OpenAI head Sam Altman, have collectively pledged millions of dollars to fund his inauguration, among a record $170 million in private donations.
Notably, it's also the tech sector that would feel the pinch of Trump's planned tariffs. Late in November, Trump outlined plans for sweeping new tariffs on China, Mexico, and Canada as soon as he takes over the reins. "On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders," he wrote on his Truth Social platform.
The more consequential tariffs, however, have been saved for China. "We will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America," Trump added on Truth Social.
According to the Office of the United States Trade Representative, the U.S. is the world's second-largest goods exporter, and the biggest importer globally. More importantly, China, Canada, and Mexico are America's top three trading partners. China, on its own, supplied over half a trillion dollars worth of imports, just under the amount from the entire EU trade bloc combined.
Which tech goodies are getting pricier?
The prices of tech commodities are likely going up. A Harvard Business Review analysis of papers discussing the impact of tariffs in Trump's first term says American buyers ended up paying more for goods. Companies talking to The Wall Street Journal and The Washington Post also confirmed that in the event of tariff-driven hikes of costs or import duties, the obvious road is to jack up the sticker price of items.
Just how much, though? A report from the Trade Partnership Worldwide, commissioned by the Consumer Technology Associaton, says the proposed tariffs would increase the price of laptops by 46%, of video game consoles by 40%, and of smartphones by 26%. As a consequence, the Technology Association predicts, customer spending on laptops and tablets, gaming consoles, and phones could sink by 68%, 58%, and 37%, respectively.
Other tech product categories that could get noticeably pricier include computing accessories, audio gear, batteries, TVs, and desktops. A clear picture will only emerge once the tariffs go into effect and consumer electronics brands make their moves in response.
Which tech brands are in the crosshairs?
The easiest way to gauge the impact of the potential tariffs is to look at tech brands' overseas manufacturing and assembly. Take the case of Mexico.
Nvidia, the leader in the artifical intelligence race, is building its largest superchip production facility in Mexico. This factory will be one of the key sites for Blackwell architecture, the foundation of Nvidia's consumer-grade GPUs and its AI.
Lenovo, the world's largest PC brand, has one of its biggest data center sites in Mexico, building all of its data center products for North America in Monterrey, and Lenovo products are made in two plants in Mexico (along with four in China and five in other countries, including one in the United States).
LG serves the North American market via TV, refrigerator and car production lines in Mexico. Samsung has already poured hundreds of millions of dollars into production there, and as of 2024's end, its Querétaro site was exporting 80% of its output to Latin America and North America. According to The Korea Times, both companies are now thinking about shifting their supply chains away from Mexico.
These companies flocked to Mexico because of the lower labor costs and trade benefits derived from the United States-Mexico-Canada Agreement, especially its lowered trader barriers and duties. With Mexico moving out of favor, experts warn, the costs of the supply chain shift will ultimately result in a deeper toll on consumers' pockets.
Just how bad is it going to get?
Some of the predictions are rather grim, including ones from the top brass at the Consumer Technology Association, the body behind the world's biggest trade show, CES. Gary Shapiro, the organization's CEO, told the Associated Press of Trump's proposals: "They are inflationary. They're paid for by consumers." And he was quoted by NBC News as likening the tariffs' aftermath to the Great Depression.
The impact on Chinese imports is likely to be even more severe than that on Mexico, given that Trump has promised to slap tariffs over 60% on goods from China. Per estimates from Yale University's nonpartisan Budget Lab, if the tariffs go into effect, the level of consumer prices could go up by as much as 5.1%. The Budget Lab added: "This cost is the equivalent of $1,900 to $7,600 per household in 2023 dollars." And so far, it looks like Trump is in no mood to mellow down on the tariff commitment, even rebutting a story that suggested otherwise.