- President Trump has revealed he is considering raising the import tariff on smartphones coming from China.
- This could increase the price of phones in the U.S.
- Smartphones managed to avoid being hit by the last round of Trump administration tariffs placed on China.
President Trump has threatened to put a ten percent tariff on mobile phones and laptops coming from China — a move that could see the price of smartphones in the U.S. increase. In an interview with the Wall Street Journal (via Bloomberg), Trump didn’t seem worried about the possibility of higher prices for consumers, saying, “I can make it 10 percent, and people could stand that very easily.”
Putting tariffs on phones coming from China wouldn’t only affect the price of Chinese brands. According to Counterpoint, 74 percent of all phones imported into the U.S. in 2017 came from China.
This currently includes phones from U.S.-based companies like Apple and Google. Both the Pixel 3 and iPhone lineups are manufactured in China and then imported back into the U.S. Brands from other countries could also be affected to varying degrees. Meanwhile, Samsung and LG are South Korean companies but export some of their phones to the U.S. from China.
A tariff on phones wouldn’t necessarily result in higher prices immediately. Manufacturers could absorb the profit hit to keep prices the same; Apple is particularly well placed to do this due to the iPhone’s already healthy profit margin. However, given how tight smartphone margins are, this move is unlikely. LG’s mobile division has operated at a loss for years now and Lenovo’s Motorola has only just begun to break even. These brands may struggle to absorb the tariff themselves.
The U.S. has increased the tariff on many Chinese products imported into the U.S. over the last year, but smartphones have so far managed to avoid being hit. In light of President Trump’s recent comments, this may not be the case for much longer.
November 27, 2018 at 01:26AM