Tariffs could cause tech prices to skyrocket, CTA warns again

As the new Trump administration prepares to take office, the Consumer Technology Association is warning again that any proposed tariffs could cause consumer technology prices to skyrocket.

The CTA began sounding the tariff warning bells last year. In the middle of CES, it provided updated information on the specific effects of those tariffs on specific products.

Since President Trump has yet to take office, it’s not clear whether he would impose tariffs, which the CTA believes he can do without congressional approval. But the possibility is still alarming. As others have done, the CTA is considering two scenarios: a 10 percent tariff on all imports, as well as a 60 percent on all products imported from China; and a 20 percent tariff on all imports, and a 100 percent tariff on Chinese manufactured goods.

If a retailer or consumer wants to import an item upon which a tariff has been imposed, they must pay the cost of the item plus an additional fee to the U.S. Not surprisingly, many regard these as taxes — including, apparently, President Trump, who has indicated that higher tariffs could offset tax cuts made elsewhere.

The CTA, naturally, doesn’t want its member companies to bear this burden.

“At their core, these proposals are tools for the U.S. government to grab as much tax revenue as possible from the American people,” the CTA said in a report made public on Thursday. “We have seen this movie before and know the ending. The proposed tariffs will not create more employment or manufacturing in the U.S. In fact, the opposite may happen where our productivity decreases and jobs may be lost over time when workers and businesses have less affordable access to technology.”

Buyers of laptops, smartphones, and tablets would face the greatest impact, the report said.

Under the 10/70 scenario, laptops and tablets would see a sharp 45 percent increase in retail costs, the CTA said, translating to about $357 more per laptop as well as $201 per tablet. Smartphones would cost about $213 more, while video-game consoles would cost about $246 more. Displays prices would jump by about $109.

“The proposed tariffs would prove to be particularly expensive for purchasers of laptops and tablets,” the CTA wrote. “Current U.S. tariffs on these products are zero, and they are not subject to any Section 301 tariffs on China either. The proposed tariffs effectively would impose a 57.3 percent tax on laptop and tablet imports.”

If Trump were to enact a more aggressive 20/120 scenario, things would get worse. Under this scenario, laptop prices would jump by $540, or 68 percent. Tablets would increase in price by $304. Smartphone prices would jump 37 percent, to $305, while video-game consoles would soar by 58 percent, to an additional $356 out of pocket.

The problem? The U.S. doesn’t have a computer-manufacturing industry. Since it does not, retailers and consumers would be forced to pay the tariffs, regardless. The CTA estimates that U.S. consumers would instead curtail their spending dramatically, reducing laptop purchases by about 44 percent.

The report can be downloaded from the CTA website for free.