News > Blog

Trump’s China tariffs go into effect today – what does this mean for the industry?

Sage Chandler, Staff Vice President, International Trade, Government Affairs, Consumer Technology Association

Today, the first part of the Trump Administration's $50 billion in new tariffs goes into effect. While President Trump says his trade policy is meant to punish China, the numbers show that, in reality, U.S. businesses, workers and consumers will pay the price under this policy.

Of the original $50 billion in tariffs on China, items including lithium batteries, navigation devices, disk drives and circuit board components will be affected – hitting $15.2 billion worth of Chinese imports.

These tariffs on $50 billion of Chinese imports, coupled with retaliation promised by China, would reduce U.S. gross domestic product by nearly $3 billion annually, and an additional $100 billion of Chinese imports would reduce GDP by $49 billion, according to a CTA and National Retail Federation study

Consequently, Trump’s tariffs combined with retaliatory actions by China risk hundreds of thousands of potential American jobs. Four U.S. jobs will be lost for every job gained.

The impact of tariffs on the average household means $150 to $306 less income a year. 

The consumer technology industry represents more than 10 percent of U.S. GDP, and projections show the sector should break records this year. However, new tariffs and the threat of a trade war seriously threaten to halt that growth.

For example, a CTA startup member HiberSense recently told Reuters that Trump’s tariffs could have a financial impact on the company’s production and add uncertainty and constraints to future business planning.

“It will take minimum of nine months and at least $200,000 in research and development before the two-year-old startup can begin production. Until then, [HiberSense Chief Revenue Officer Bob] Fields says the company will have no option but to pay an additional 25 percent tariff on the shipments of thermostats from China, and hope that its customers would accept the increased costs.

Fields said the tariffs would increase the average retail price of HiberSense systems to above $2,000 per unit from about $1,900 earlier.

A trade war based on increasing tariffs hurts the United States and China, and businesses and consumers. A trade war doesn’t have winners—our markets are interconnected. Failure to reach a solution would tumble our markets, inflation would rise and Americans would suffer economically.

While China’s trade behavior is troubling, diplomacy through constructive bilateral processes can achieve the desired objectives without the disproportionate harm to the U.S.