Trump Spared Laptops and Mobile Phones, but Most Goods Still Subject to Tariffs

Despite the latest wave of so-called “reciprocal” tariffs against China, former U.S. President Donald Trump has decided to exempt smartphones, laptops, and other key technological goods from them, providing relief to major tech giants like Apple, Microsoft, and Nvidia. However, an analysis of trade data reveals that 46 out of the 50 most important products that the U.S. imports from China are still subject to tariffs – which could significantly impact American consumers.

More Expensive Toys, Fans, and Household Appliances

According to data on imports of goods worth over a billion dollars, the impact of the new measures could soon be felt on store shelves. More than three-quarters of video game consoles, food processors, and electric fans imported into the U.S. last year were produced in China. Toys will also become more expensive – as much as 75 percent of dolls, tricycles, scooters, and other children’s vehicles arriving on the U.S. market come from China.

Mattel, the manufacturer of the popular Barbie doll, has already warned that it may raise prices to offset the impact of tariffs – and this was before the latest escalation of the trade conflict by Trump. This California company, which also has Hot Wheels cars and the card game Uno in its portfolio, states that 40 percent of its products are produced in China.

Exemptions for Apple and Others

Trump’s decision to exempt smartphones, routers, chip manufacturing equipment, and certain laptops and computers from tariffs comes after a tumultuous week on U.S. stock markets. This is an extremely important decision for American tech companies – last year, smartphones and laptops alone accounted for imports worth as much as $74 billion, with most of that goods coming from China.

For Apple, whose supply chain is heavily reliant on Chinese factories, this represents a significant relief. However, for all other consumers planning to purchase goods that are still under 125 percent tariffs – the problems are just beginning.

Chad Bown, a senior analyst at the Peterson Institute for International Economics, warns that the speed and scale of the new measures could easily lead to cost shifts onto consumers. “Tariffs are now being implemented faster, on a larger scale, and on many more consumer products than during Trump’s first term. The risk of a significant price increase is high,” Bown emphasizes.

For millions of Americans looking to cool off this summer – the news is not good. Nine out of ten electric fans sold in the U.S. last year came from China, and the same goes for 40 percent of standalone air conditioners. Chinese factories lead the global export market for these devices.

Household microwave ovens are no exception – 90 percent of those imported last year were of Chinese origin, and China controls three-quarters of the world’s exports in that category.

Relocation of Production

Although many Western companies have tried to diversify their supply chains and relocate production outside of China in recent years, the process is slow and complex. Allie Renison, a former official at the British Department of Trade, now at the consulting firm SEC Newgate, warns: ‘Relocating production may not be the biggest problem, as Southeast Asia is already significantly increasing its industrial output. The bigger challenge will be the conditions that the U.S. sets in trade agreements with those countries.’

For complex electronic products like smartphones and gaming consoles, relocating production is even more complicated. Jason Miller, a professor at the Eli Broad College of Business at Michigan State University, explains that a tremendous effort is required to establish a new manufacturing network: “New capacities need to be created, workers trained, and alternative supply chains for components established.”

Bank of America analyst Wamsi Mohan estimates that even if Apple reserved all of its iPhone devices produced in India exclusively for the U.S. market, it would only cover half of the annual sales, which exceed 50 million units.

What if Goods Simply Disappear?

Four out of five smartphones and gaming consoles imported into the U.S. last year were produced in China. And while certain American manufacturers may hope for exemptions, the biggest concern for consumers is – shortages.

“The biggest fear for consumers is that importers, aware that they cannot pass on increased costs to end customers, will simply stop importing some products from China,” concludes Professor Miller.