Technology Economists warn that Trump's tariffs could cause tech prices to skyrocket

[Gandalf_The_Grey]

Content source

https://www.techspot.com/news/105205-economists-warn-trump-tariffs-could-cause-tech-prices.html

In June, sixteen Nobel Prize-winning economists signed a letter expressing concern that Donald Trump's proposals could reignite inflation, which is currently nearing the Federal Reserve's 2 percent target after surging to 9.1 percent in 2022.

They were primarily referring to his plans to impose tariffs of 10 to 20 percent on imported goods, along with a special 60 percent tariff on imports from China, aimed at encouraging the return of manufacturing to the US.

It is unclear whether manufacturers would pull up stakes and move back to the US in response, but what is certain is that these tariffs will lead to higher prices on imports, and that includes electronic products such as laptops, smartphones, monitors, desktop computers and TVs, most of which are primarily manufactured in China.

According to a recent Consumer Technology Association (CTA) report, a 10 percent global tariff combined with a 60 percent China-specific tariff could increase laptop prices by 45 percent. For instance, a laptop currently priced at $793 would cost consumers an additional $357. Premium models could see even greater increases, adding $450 for every $1,000 of current pricing.

The CTA, in partnership with Trade Partnership Worldwide (TPW), has projected significant price hikes across a wide range of products. Smartphone costs are expected to rise by 25.8 percent, while monitors are anticipated to see a 31.2 percent increase.

Game consoles, which are primarily made in China, could experience a substantial 39.9 percent jump. In contrast, desktop PCs, which rely less on Chinese manufacturing, are projected to have a more modest rise of 6 percent. The overall cost of electronics could increase by $90 billion annually, causing sales to fall undoubtedly.

The proposed tariffs could have far-reaching effects beyond higher consumer prices. The Tax Foundation estimates that a 10 percent general tariff, plus a 60 percent China tariff, could lower GDP by 0.8% and potentially cost 1.4 million full-time jobs over time.

Economists warn that Trump's tariffs could cause tech prices to skyrocket

In June, sixteen Nobel Prize-winning economists signed a letter expressing concern that Donald Trump's proposals could reignite inflation, which is currently nearing the Federal Reserve's 2 percent...

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[n8chavez]

This needs to happen. It will raise prices in the short-term, but it needs to happen. The US has become way too dependent on China. Yes, products from there are cheaper but we need to bring electronics manufacturing back to the US, and the jobs that come with it. We need to stimulate our own economy, not China's.

 

[monkeylove]

This is going to be difficult because the dollar is used as a global reserve currency. That means its value has to be high due to demand for the dollar, and because of that, what the U.S. exports will be expensive for many but what it wants to import cheap.

That's why the balance of trade of the U.S. has been in the deficit since the 1970s.

How to buy more while selling less? That's why U.S. debts have been rising overall since the early 1980s.

 

[n8chavez]

No. The US debt has been rising because we act like a household with no budget.

 

[monkeylove]

No. The US debt has been rising because we act like a household with no budget.

Yes, that's why the trade deficits have been growing since the 1970s: the country borrows more to import more.

 

[Sorrento]

It seems some people in China & similar are willing to work for a pittance & even live in dormitories, Foxcon based in Taiwan for example - People in the US & Europe are not going to & work for pennies & like to live in houses & own nice cars - It's not just China, many Asian countries supply clothing at a price you couldn't buy the cotton for anywhere in the west - India is the upcoming powerhouse, I think the cat is out of the bag & its not going back.

 

[Oldie1950]

I am glad that at the age of 74 my future is essentially already behind me. The future will be bleak for the western industrialized countries.

 

[oldschool]

No surprise here. The Orange One tells supporters that other countries pay tariffs. And some people, too many actually, believe him.

 

[Jonny Quest]

It's gotten so bad he's even had to take a supplemental job working at McDonald's

https://thehill.com/homenews/campaign/4943721-trump-works-mcdonalds-mocking-harris/

 

[Marko :)]

@oldschool @Jonny Quest I really hope your country will make the right decision, because it won't only affect the US, but the entire world. In this day and age, the most important thing is to be united rather than divided, which is exactly what Trump wants. He doesn't care about people; he cares only about himself and his business. In case of Trump's victory, it's real possibility that the US could transfer to authoritarian regime just like Russia is. The US is far away from me, but I really don't want to see that happen.

 

[SeriousHoax]

I'm not really a political person but ironically, I probably have a bit more knowledge about American political scenario than my own country's. That's how influential the USA is.
It seems both candidates are not too great. In fact, Kamala seems like one of the worst presidential candidates in recent history at least, while the other candidate Trump is not too great either. As an outsider I can be somewhat unbiased, so from what I have seen if I were a regular American, I would probably still go for the orange man over Kamala since there is no other option. Hopefully you guys will have better candidates on both sides in 2028.
Sorry, I know MT is not a political discussion forum.

 

[Jonny Quest]

I'm not really a political person but ironically, I probably have a bit more knowledge about American political scenario than my own country's. That's how influential the USA is.
It seems both candidates are not too great. In fact, Kamala seems like one of the worst presidential candidates in recent history at least, while the other candidate Trump is not too great either. As an outsider I can be somewhat unbiased, so from what I have seen if I were a regular American, I would probably still go for the orange man over Kamala since there is no other option. Hopefully you guys will have better candidates on both sides in 2028.
Sorry, I know MT is not a political discussion forum.

This is exactly where I'm at. The more interviews, non-reply responses I've heard from Kamala, I am not impressed. Let alone the Govenor from my state who is the VP candidate....I'll leave it there, not into political or religious discission on a forum. Nothing good usually happens doing it that way.

 

[harlan4096]

Please, stick to the part related to tech, thanks.

 

[SumTingWong]

This needs to happen. It will raise prices in the short-term, but it needs to happen. The US has become way too dependent on China. Yes, products from there are cheaper but we need to bring electronics manufacturing back to the US, and the jobs that come with it. We need to stimulate our own economy, not China's.

Bring back the jobs!

 

[monkeylove]

It's really an economic issue:

The U.S. allowed the dollar to be used as a global reserve currency after WW2 in order to minimize the possibility of another global conflict. (When you sell to another country and receive their currency as payment, and when that country falls apart, decreasing the value of its currency, then you may be dragged down with it.)

Having your currency as a global reserve creates a double-edged sword for you because whatever you try to sell to others becomes too expensive for them and whatever you can buy becomes a lot cheaper.

The result is that you end up selling less and buying more, which is impossible because you need to earn in order to buy. To keep buying more, you borrow more, which means creating more dollars, and which you can do because as other countries grow economically then they need more dollars for trade. And you can take on more debt if you deregulate. That's why U.S. debts started going up with deregulation in the early 1980s.

At some point you realize that it'd be cheaper to just build things near the markets where you want to sell, so you outsource. And if cheaper labor's close enough, then you can also outsource those, too.

Meanwhile, more of your factory workers are about to retire, and their children, who went to trade school or college, are more interested in working in the service industry, where the pay's higher. So, that's another reason to outsource, too.

And you see other countries doing the same as they grow richer, like several in Europe and even countries like Japan and South Korea. That's why when you look at those U.S., Japanese, and South Korean brands, you'll notice that they're made in China, India, etc.

And as countries like China become richer, they start outsourcing, too, which is why half their manufacturing's assembly of components made in places like the Philippines, Indonesia, and so on.

Similar happened to many countries. For example, Taiwan used to make semicoductors and slippers. And then it made semiconductors and computer parts. Now, it just focuses on the first and has to rely more on foreigners for factory work.

Singapore used to make slippers, textiles, etc., then hard drives, and then now some armaments but focuses more on banking. Meanwhile, it's Thailand who took in hard drive manufacturing and even car assembly.

In that case, you can only have cheap tech prices by importing, but you'll have to take on more debt because you can't export enough. If you want to avoid more debt, then you'll have to start making tech yourself, but if locals demand $20 an hour for that, then you'll still end up with high tech prices, plus you might not be able to sell a lot overseas because your prices are too high.

Finally, this reminds me of warnings from contractors saying that if Trump cracks down on immigration, then building prices will go up. It's as if they're implicitly admitting that the reason why they've been able to keep those prices low is because they've been relying significantly on illegal labor!

Here's the punchline: what happens if more countries, as they grow stronger economically (and they are), start moving away from the dollar for trade?