Here’s What Decision Makers Need to Know About Tariffs Affecting Tech

Among the trade war occurring between the United States and China, technology products have been hit with the highest tariffs, Bloomberg says. The United States has paid $1 billion more in tariffs on tech imported from China in October 2018 than in 2017 after new duties imposed by the current administration started.

Since July of this year, President Trump has imposed tariffs on $250 billion in Chinese imports; the duties of the tariffs occurred in three tranches, “the latest which applied to $200 billion in goods and took effect Sept. 24,” according to Bloomberg. As a result, tariff costs rose “more than seven-fold,” to $1.3 billion.

What decision makers need to know:

With frictions between the world’s two biggest economies rising, decision makers, especially those responsible for placing purchase orders on tech, should keep in mind which technologies are affected by the imposed tariffs. For example, Bloomberg says that products ranging from “printed circuit boards, to computer servers and vacuum cleaners” are affected, but companies like Apple have “so far avoided tariffs on popular products it manufactures in China such as the iPhone and Apple Watch.”

Tariffs might also affect the cost of telecommunications equipment, which can slow the deployment of mobile networks (information from The Verge). Watching which companies and products are affected can help decision makers reconfigure their budget, weigh how badly they might need to purchase and/or sell a specific product, and adjust their strategies accordingly to avoid conflicts with customers and employees alike.

Where we’re headed:

While the current situation regarding tariffs on tech is putting strain on decision makers and tech companies, there may be a light at the end of the tunnel. According to Bloomberg, the United States and China are in “a new round of talks” to develop a “lasting truce.” After Trump and Xi Jinping, president of China, met earlier this month, the United States agreed to “put off raising the tariff rate on the $200 billion of imports from 10 percent to 25.” Plus, there is also talk circulating on potentially striking a deal to make “structural changes” to China’s economy by March 1. Even though it’s not yet clear what this means for decision makers, one of their best strategies to ride the tariff wave is to watch and wait, especially as the new year rolls in.