Austere, a company established by Deena Ghazarian, started doing business in 2018. In 2019, her audio and video accessories were set to earn her business additional returns, as major American retailers were interested in contracting with her. Ghazarian attempted to import the necessary materials from China, so she could meet consumers’ needs as soon as possible. Trump was elected as president in 2018, and his protectionist policies fundamentally transformed everything. As a result of The Trade War, Ghazarian now had to pay a 25% import duty on each and every cable and component from China. This completely perplexed Ghazarian as she wondered whether her business could survive with these tariffs. “I literally thought I am going to start and end a business in less than a year,” Ghazarian shares.
The good news is that Ghazarian’s venture has successfully sailed through the storms so far. The bad news, however, is that many other American companies are in the same precarious situation now. When he returned to office in January, Trump further upped tariffs from 20% to 25% for almost everything imported from China, Canada, Mexico and several other countries.
The President aims to address the steady inflow of illegal drugs and migrants, put a stop to the offshoring of American manufacturing, and deal with the trade deficits. The new tariffs are set to affect an even larger scope of goods than previously, which for the first time, include smartphones, desktop computers, and tablets. “US importers have to pay these taxes, not the exporters,” said Ed Brzytwa, Vice President for International Trade at Consumer Technology Association (CTA) representing over 1,200 tech firms. “It’s American businesses and consumers who will suffer.”
The CTA reports about $146 billion worth of electronic imports from China make up the bulk of US imports. China holds the greatest share in supporting Ghazarian’s United States firm that specializes in electronics. According to the United States Census Bureau, mounts, monitors, laptops, video game consoles, smartphones, tablets, and other electronic goods are deeply imported.
While Chinese outsourcing has been sought to be lessened by many American companies since Trump’s first term, newer specialized, industrialized, and developed countries such as Taiwan, Thailand, and Vietnam, singularly do not have the ability to replace China’s. Alongside this, entire sections of Mexican industry do manufacture those electronics, and slowly but surely, domestic American manufacturing is increasing, but the expenses and regulations hamper it.
Mary Lovely from the Peterson Institute highlights that China still plays a major role in the supply chain. She points out that, “Relationships with new suppliers take time to develop; they are costly to establish.” That being said, Apple and some other companies have begun manufacturing in India.
Studies show that a large amount of tariff costs are shifted to consumers in the form of higher prices. Corie Barry, the Best Buy CEO, claimed that “the vast majority” of new tariffs will absolutely be passed onto consumers due to low margins of profit, “At the end of the day, it’s very tough to sell electronics these days.” In February, Taiwan’s Acer predicted a rise in their laptop prices by 10 percent due to tariffs, and HP stated that they would be losing profits, ultimately, and needed to increase their prices.
Ghazarian plans to raise her product prices this year, but is uncertain of the possible outcomes. “There is a price point where the customer is satisfied with the value of goods provided,” she notes. “The moment I shift above that, I start to lose customers.” The current inflation rate only makes matters worse for American consumers, giving them more need to be concerned.
Their products are due for a second exemption, as they received from Trump’s first term Apple is among the several enterprises which believe that there are some products which exempt the tariffs as set by the Trump Administrations. Insiders say that in light of the recent spell of Trump Tarrifs in the markets Trump intends to use tariffs as a bargaining chip and may choose to give concession similar to the 2020 deal with China.
But current tensions pushing on all sides means that the altercations have to be amplified. Canada, China, and Mexico have all pledged that they will take measures against US tariffs, while lately Trump threatened to increase by two-fold the tariffs on aluminum and steel from Canada, but later canceling the move literally at the last moment. He has also proposed “reciprocal tariffs” with other nations, and deepened the tone of his election campaign which he announced hinting at raising the tariffs for goods sent from China to the US by as much as 60 percent.
If this happens, the more expensive the cost of living will become for the employees in the high-technology companies. Where China would shift it’s manufacturing bases to has remained a mystery but high-wage countries with higher standard of living wages where people live certainly fuel the prediction. And these sorts of moves, on the other hand, could invite tougher measures in the form of retaliatory tariffs from other countries and these tariffs could grant access to US technologies while complicating China related products.
Even with her worries, Ghazarian feels better prepared this time compared to the last. Like several other business owners, she bought more products than she needed before Trump’s return to office and kept it in her east coast warehouse. Her aim is to keep her business supported throughout next year so she can “pivot” when she needs to. “That could imply looking for a cheaper way to manufacture the product, or it may mean doing something else entirely. It’s really frustrating that I have to focus on just surviving instead of growing my business.”
