How Tariffs Are Impacting the Electronics Industry

Tariffs Impacting Electronics Industry

Recent news has been buzzing about the current increased tariffs imposed by the Trump Administration against Chinese imported goods, with China quickly following suit. The administration imposed $34 billion in tariffs on Chinese imports, with most of the tariffs impacting the import of electronic components. In response, China announced its own set of $34 billion in tariffs on U.S. products. Furthermore, the administration is now talking about putting an additional tariff on all imported goods from China, totaling $505.5 billion to be exact. This will greatly have some impact on companies trading with overseas business partners who import goods made in China into the U.S.

A list published by the United States Trade Representative details more than 1,000 specific products that will be affected by the tariffs, many of which are electronic components and finished goods. Currently, the tariff will only be applied to products identified by HTS codes in the list and imported into the United States where China is the country of origin. Buyers in the U.S. will soon see price hikes on LED lighting, phones, computers, and similar everyday consumer items. This also includes a broad range of components in the manufacturing of these devices, everything from resistors, capacitors and transistors to semiconductors. The price hike will also trickle down to the consumer side as well, as manufacturers likely pass their increased overhead onto their customers. This is now a question for the manufacturers, as they need to decide how much of the tariff they should absorb versus how much they should pass on to a customer.

The trade war is a clear issue for an industry already strained by a shortage. In June, the ISM, Institute for Supply Management, reported “capacitors in short supply for 12 months, resistors for eight, and electronic components for two.” Tariffs are playing roles in longer lead times and possibly, more offshore manufacturing. With the threat of increased prices, buyers are shopping around for better prices or trying to leverage existing suppliers, taking them twice as long to place an order and in turn, increasing lead times even more while they take time to shop. Many suppliers are shifting production to facilities outside the U.S. to avoid tariffs altogether.

With over 40 years in this dynamic industry, Advanced MP Technology has adapted and evolved from many environmental changes. We have a total of 4 global logistics hubs, located in San Clemente, CA, Budapest, Hungary and Hong Kong, China. These logistic centers, along with 28 offices scattered all over the world, have assisted with our flexible supply chain and provided import and export benefits. While complying with all government regulations, we constantly monitor these regulations and industry changes to provide the most cost-effective solutions to aid our customer interests. Furthermore, our knowledgeable and resourceful highly trained global sourcing and logistics teams are known to provide our customers with the highest quality product and alternatives at the most optimal price. We provide assistance to our customers to keep production lines running.