The tariffs proposed by President Donald Trump have major implications for the smartphone industry.
Illustration photo.
Finally, the 2024 US presidential election has ended with Donald Trump leading the vote.
So what happens next? In addition to a host of highly sensitive issues, the smartphone industry is also expected to undergo some changes.
Trump has previously talked about imposing tariffs on imported goods, as he did during his first term.
The tariffs imposed during his first term were disruptive to some extent, and it is likely that Trump will take things even further this time around.
New US President - Donald Trump.
New US President - Donald Trump .
Reports indicate that Mr. Trump wants to impose a 20% tariff on all imports and a 60% tariff on Chinese goods.
According to him, these tariffs will encourage American companies to bring their factories back home. This will increase the price of products, making it difficult for the average consumer.
How will consumers be affected?
Most major phone makers — including Samsung , Apple , and Google — rely on foreign imports to make their products.
If Mr. Trump’s proposed tariffs go through, Apple and Google would be the most affected of the three companies.
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Apple relies heavily on Chinese labor and, although it has recently moved some operations to India and Vietnam, will still be hit hard. However, it is also possible that Apple will be exempt from these tariffs, as it was during President Trump’s first term. Apple CEO Tim Cook called Donald Trump a few weeks ago to discuss the difficulties of doing business in the EU, and it is entirely possible that the two sides could come to an agreement.
Illustration photo.
Google also relies on Chinese manufacturing for its Pixel phones and may not get special treatment from the new president. Samsung would be the least affected, having closed its last factory in China in 2019. But the 20% tariff would still cause some trouble, though not as much as it would for Google and Apple.
Higher tariffs will increase the price of phones, as companies pass the costs on to consumers. And moving manufacturing to the US won’t happen overnight. Uprooting entire international production chains would take years, and consumers would pay the difference in the meantime.
New tariffs will hurt US businesses
The proposed tariffs would not only hurt American consumers, but they would also likely hurt American businesses. If a trade “war” breaks out and the United States imposes high tariffs, affected countries could “retaliate” by imposing their own tariffs on American products. This would reduce demand for American products in those countries, making it harder for American companies to gain a foothold in countries with less purchasing power.
In other words, if tariffs are imposed, smartphones will become even more expensive in many other countries, causing consumers to consider cheaper Chinese products. Furthermore, trade “wars” of this scale have the potential to disrupt global supply chains, leading to bottlenecks, shortages, and even more burdens for consumers.
In short, according to Mark Zandi — an economist at Moody's Analytics — this is probably a "really bad idea."
On the other hand, some American businesses believe that this will help reduce competition from foreign businesses.
