China tariffs will cost the U.S. economy up to $2.4B annually

The Trump administration’s consideration of tariffs on Chinese printed circuit assemblies and connected devices would cost the economy $520.8 million and $2.4 billion annually for the 10 percent and 25 percent tariffs, respectively, according to a new study commissioned by the Consumer Technology Association (CTA).

“With the economy thriving under President Trump – we’ve seen remarkably low unemployment and a booming stock market – the administration shouldn’t jeopardize America’s global standing with tariffs,” said Gary Shapiro, CEO and president, CTA. “Foreign governments don’t pay the cost of tariffs, Americans do – and for that reason, U.S. trade policy needs to steer clear of tariffs that act like taxes on American manufacturers and consumers. The danger we face – the unintended consequence – is that tariffs mean Americans will pay more for all the devices they use every day to access the internet.”

The economic impact study shows American shoppers will have to pay between $1.6 billion and $3.2 billion more for connected devices such as gateways, modems, routers, smart speakers, smartwatches and other Bluetooth enabled products. The price of connected devices from China will increase by between 8.5 and 22 percent. And prices for these products from all sources will rise between 3.2 and 6.2 percent.

Similarly, the price of printed circuit assemblies from China –– will increase by between nine and 23 percent, while an alternative supply from U.S. manufacturers will cost two to three percent higher. As a result of higher input costs, totaling an additional $900 million to $1.8 billion, American manufacturers of products that contain printed circuit assemblies will purchase between six and 12 percent less from suppliers overall.

“When our government begins to charge its own companies and people with more taxes in the form of tariffs, we have put in jeopardy not just the American Dream of many small and mid-size businesses, but you put in jeopardy the people that work for them too,” said Win Cramer, CEO, JLab Audio, a California based company and CTA member. “These people support a growing economy, support a growing business and, most importantly, pay taxes. Pre-tariffs, JLab Audio was planning to scale up with new hires and programs to push our company’s growth to another level, but now we’ve put all of that on hold as we need to see how everything shakes out.”

Based on CTA’s most recent U.S. Consumer Technology Sales and Forecasts report, if the administration enacts tariffs of 10 and 25 percent, CTA projects 2019 U.S. unit shipments of connected devices such as fitness trackers, smartwatches, wireless headphones, modems/broadband gateways, wireless earbuds and smart speakers would decline by as much as 12 percent. Also, U.S. shipment revenues for these devices would decrease by as much as 6.5 percent in 2019.