Tariffs could cause tech prices to skyrocket, CTA warns again

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

CTA Starts Ringing Fare Warning Bells last year. Midway through CES, it provided an update on the specific impact of these tariffs on specific products.

Since President Trump has not yet taken office, it is unclear whether he will impose tariffs, which the CTA says he can do without congressional approval. But this possibility is still alarming. Like others, the CTA is considering two scenarios: a 10 percent tariff on all imports, as well as a 60 percent tariff 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 that has been subject to a tariff, they must pay the cost of the item plus an additional U.S. duty. Not surprisingly, many see this as taxes, including, apparently, President Trump, who has indicated that higher tariffs could offset tax cuts made elsewhere.

The CTA naturally does not want member companies to bear this burden.

“At their core, these proposals are tools to enable the U.S. government to extract as much tax revenue as possible from the American people,” the CTA said in a report released Thursday. “We have already seen this film and know the ending. The proposed tariffs will not create more jobs or manufacturing in the United States. In fact, the opposite may happen, where our productivity will decline and jobs may be lost over time as workers and businesses have less access to technology.”

Buyers of laptops, smartphones and tablets will be the hardest hit, the report said.

In the 10/70 scenario, retail spending on laptops and tablets would increase 45 percent, resulting in an increase of about $357 per laptop and $201 per tablet, according to the CTA. Smartphones will cost about $213 more, and gaming consoles will cost about $246 more. Display prices will jump by about $109.

“The proposed tariffs will be particularly expensive for laptop and tablet buyers,” the CTA wrote. “Current US tariffs on these products are zero, and they are also not subject to any Section 301 tariffs on China. The proposed tariffs would effectively impose a 57.3% tax on imports of laptops and tablets.”

If Trump had implemented the more aggressive 20/120 scenario, the situation would have gotten even worse. Under this scenario, laptop prices would jump by $540, or 68 percent. Tablets will rise in price by $304. Smartphone prices will jump 37 percent, to $305, and video game consoles will rise 58 percent, to an extra $356 out of pocket.

Problem? There is no computer manufacturing industry in the US. Since this does not happen, retailers and consumers will be forced to pay the tariffs anyway. The CTA estimates that U.S. consumers will instead sharply cut their spending, cutting laptop purchases by about 44 percent.

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