US technology firms are feeling the strain as heightened tariffs on Chinese imports drive up costs, raising concerns about price hikes and supply chain disruptions.
Entrepreneur Deena Ghazarian recalls the moment her business, Austere, faced its first major crisis just a year after launching. The California-based company, which produces high-end audio and video accessories, had secured deals with major US retailers when former President Donald Trump imposed sweeping tariffs on Chinese imports in 2019.
Overnight, a 25% levy was added to every cable and component she sourced from China, forcing her to absorb the extra costs and putting her business on the brink of collapse.
“I genuinely thought my business would end in less than a year,” Ghazarian said. “I had invested so much time, money, and effort, only to be blindsided.”
Austere managed to survive, but now, like many other US companies, it faces a familiar challenge.
Since returning to office in January, President Trump has increased tariffs on all Chinese imports by 20% and imposed a 25% duty on goods from Canada and Mexico, though some of those tariffs have been postponed until April.
A Widening Scope of Tariffs
The White House argues these measures are designed to curb illegal drug and migrant flows, bring manufacturing back to the US, and address trade imbalances. However, this round of tariffs is more expansive than before, targeting previously exempt products such as smartphones, desktop computers, and tablets.
“US importers—not foreign exporters—bear the brunt of these taxes,” said Ed Brzytwa, vice president of international trade at the Consumer Technology Association (CTA), which represents over 1,200 tech firms. “It’s American businesses and consumers who will suffer.”
China remains the top supplier of electronics to the US, with imports totaling $146 billion in 2023. According to the CTA, China accounted for 87% of US video game console imports last year, along with 78% of smartphones, 79% of laptops and tablets, and two-thirds of monitors.
Despite efforts to diversify supply chains since Trump’s first term, alternative manufacturing hubs such as Thailand, Taiwan, and Vietnam still lack China’s production scale and expertise.
“The supply chain is deeply rooted in China,” said Mary Lovely, senior fellow at the Peterson Institute in Washington, D.C. “Shifting to new suppliers takes time and money.”
Consumers to Bear the Cost
With little room to absorb higher costs, businesses are likely to pass the tariffs on to consumers. Corie Barry, CEO of US electronics retailer Best Buy, recently warned that the majority of these additional expenses would be reflected in higher prices.
Taiwanese PC manufacturer Acer has estimated that the price of its laptops will rise by about 10%, while US tech giant HP has cautioned that tariffs will dent its profits.
Ghazarian is also weighing price increases but fears losing customers. “There’s a point where consumers no longer see value in the product,” she said. “With inflation already squeezing budgets, it’s a risky move.”
A Shifting Trade Landscape
During Trump’s first term, companies like Apple secured exemptions for certain products, and similar carve-outs could emerge this time. Some analysts suggest Trump may use tariffs as a bargaining tool, as he did in 2020 when China agreed to increase US imports in exchange for reduced trade penalties.
Yet, trade tensions remain high. China, Mexico, and Canada have vowed to retaliate, while Trump has threatened further tariff hikes, including a possible 60% levy on Chinese goods.
If China relocates manufacturing to higher-cost countries, global tech prices could rise. Meanwhile, other nations may impose retaliatory tariffs on US technology exports, further complicating the landscape.
For now, Ghazarian is bracing for uncertainty. Like many business owners, she stockpiled inventory before Trump took office, storing supplies in her East Coast warehouse.
“We’ll have to pivot again—either find a more cost-effective production method or take a different direction altogether,” she said. “It’s frustrating to focus on survival rather than growth.”
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