Supply chain solution blog

Are US/China Tariffs Impacting Electronics Manufacturing?


The background to the tariff war between the US and China is complex.

Since July 2018 a series of tariffs have been levied by the US on a wide range of Chinese goods, and China has retaliated with its own tariffs. The tariffs were initiated by the Trump administration for political and economic reasons (such as opening parts of the Chinese market to American companies), but one key factor behind them was the concern about intellectual property (IP) theft in China.

In general, the technology industry in the US supports IP protection and fair trade, though several trade bodies (such as the SIA, ECIA and IPC) have expressed concerns about achieving these goals through tariffs.

How have the tariffs affected trade? One consequence is that global manufacturers have moved some of their offshore manufacturing out of China into other low-labour-cost economies. There have also been price increases as the tariff costs have been passed along to customers.

The tariffs themselves are not the only impact. Companies face higher costs because of the workload involved in tracking and compliance, and increasing needs for communications with customers to let them know what’s going on. A majority of manufacturers report that demand has decreased due to either higher prices or because demand was pulled forward.

The major concern right now is that tariffs might be increased to 25% levels.


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