Trump's Chinese Tariffs Threaten Internet Devices
October 10, 2018
- Author: Sage Chandler
September/October 2018
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As the trade war with China continues to escalate, the impact it will have on small American companies and the consumer becomes more evident. The most recent $200 billion tariff list impacts a range of consumer technology products from devices used for cloud computing to popular consumer products.
This list is far more expansive than previous tariff lists, targeting more than 6,100 products at a tariff rate as high as 25 percent. Key products that consumers use to access the internet are targeted – gateways, modems, routers, set-top boxes, e-readers, smartwatches, fitness trackers and streaming devices for TVs, Bluetooth and smart speakers – as well as the products and components used to build internet infrastructure. Simply put, these tariffs will make going online more expensive for everyone.
Tariffs are a tax – and this is an Internet of Things (IoT) tax on Americans. American businesses will incur higher costs to make the products consumers want, and companies will have to pass those costs down, leaving consumers with fewer choices at higher prices. Foreign governments don’t pay the tariff – we do.
Here is how the domino effect happens:
If data centers face a 25 percent tariff on the servers and routers they use, that 25 percent cost increase, likely along with corresponding fees, could be passed down to the internet service providers (ISPs) that access those data centers. Additionally, the ISPs’ costs would rise 25 percent on products, such as the modems they import. Those costs and fees could pass on to someone else in the supply chain until they reach the consumer.
As a result, American consumers will face higher prices not only for the popular tech products they buy, but also to connect them to the internet.
The first will be on the consumer technology products they buy at retail stores or online, and the second will be in the form of increased costs associated with accessing the internet and tapping into the cloud. While most consumers don’t think about the ecosystem that surrounds their connected devices, tariffs will have a negative impact on their wallets and ability to access and enjoy the internet.
America is one of China’s largest trading partners. In the last decade, U.S. exports of goods to China grew by 86 percent, while U.S. exports to other nations increased by only 21 percent, according to the U.S.-China Business Council. Under the threat of tariffs, the U.S. is benching businesses and encouraging the Chinese to import goods from America’s foreign competitors. Tariffs are a recipe for disaster – giving a leg up to America’s foreign competitors.
With the economy thriving under President Trump – our country currently has remarkably low unemployment and high productivity rates – the administration can’t jeopardize America’s global comeback with a tariff setback.
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