Market Overview

CTA Study: China Tariffs Will Cost the U.S. Economy up to $2.4 Billion Annually

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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.

The full study can be found here.

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