Free Trade

Next Round of Tariffs Will Be $1 Billion Tax Increase on Smartphones, TVs, Tablets, and More

Thanks to the trade war, Americans are already importing fewer laptops, speakers, and other electronic items—and paying a higher price for the items they do buy. A bigger hit is coming.


From headphones to smartphones, from printers to speakers, the next round of tariffs on Chinese-made products is likely to be a $1 billion tax increase on consumer electronics.

President Donald Trump's earlier rounds of tariffs mostly avoided hitting consumer products and electronics—though the focus on manufacturing inputs meant some American tech firms got hit anyway if they import component parts from China, as many do. The next round of 10 percent tariffs, which Trump says will take effect on September 1, will hit almost all remaining un-tariffed imports from China.

That means personal and home electronics won't be spared much longer.

"Tariffs are taxes—and increasing costs on companies puts consumers in the middle of President Trump's trade war," says Gary Shapiro, president and CEO of the Consumer Technology Association (CTA).

According to an analysis from the CTA and the Trade Partnership, a pro-trade policy organization, the next round of tariffs will hike the taxes Americans pay on consumer electronics by about $1 billion per month.

That's on top of the costs American tech companies are already facing. According to CTA, the industry paid $1.7 billion in tariffs in June of this year. That's eight times more than was paid in June 2018, despite the fact that consumer electronic imports from China had declined by 39 percent year over year. Trump imposed then first round of tariffs on Chinese imports in July of last year.

In short, Americans are importing fewer laptops, speakers, and other electronic items from China, and they're paying a higher price for the items they do buy. That's a good illustration of a few of the problems with Trump's tariff strategy. He has imposed a regressive tax that makes it more difficult for Americans to afford modern tech, while simultaneously whacking the blue-collar jobs that are supported by supply chains bringing televisions and other goods from American ports to local stores.

In June, Americans paid $6 billion in tariffs—one of the highest single-month totals, in nominal terms, in American history. Tariffs imposed by the Trump administration accounted for more than $3.4 billion of that overall total, according to a new analysis from Tarrifs Hurt The Heartland, an anti-tariff coalition of business groups.

"Americans are already paying record-high tariffs, and the biggest hit to consumers is still to come," said Johnathan Gold, a spokesman for the group.

In June, when the Office of the U.S. Trade Representative held a series of hearings on the proposed new tariffs on Chinese imports, representatives from the consumer electronics industry delivered a consistent warning about the consequences of imposing those trade barriers.

Jesse Spector—director of technology policy at the Software and Information Industry Association, which represents more than 800 companies—told the office's tariff committee that new tariffs on cell phones, laptops, and tablets will "have a direct, significant, and negative impact on the businesses of our members."

He predicted that firms will "reduce product lines, raise prices, and cut American jobs."

The tariffs could also jeopardize the Trump-backed effort to see America "win the race" to 5G—that is, to be the first country with an operational fifth-generation mobile internet network.

In June, according to the CTA, American tech companies paid $131 million in tariffs on 5G-related products, including new smartphones, mobile routers, and other hardware.

In a statement, Shapiro urged Congress to revoke Trump's unilateral trade powers.

"While we support the president's effort to stop China's forced technology transfers and [intellectual property] theft," he said, "this unpredictable trade policy forces companies to raise the costs of their products, leaving American businesses, workers, and families—not China—to pay for these tariffs."