While many around the globe are concerned about a specific and all-out trade war between the US and China, we now realize that the recent tariff expansion on all goods imported from China will surely be problematic and affect Asia`s supply chain as prices will rise on smartphones, laptops and other consumer products. We have sourced this article from the Nikkei Asian Review, attributed to staff writers Kawanami and Shiraishi.
When suddenly out of nowhere President Trump cried foul last Sunday and placed a deadline on Friday for a trade deal, markets were shocked and equity was sold off. We at Classiarius realized that the next couple of weeks would see volatility increase in major indices as over $300 billion in goods will see tariffs jump from 10% to 25%,
US Trade Representative Robert Lighthizer said on Friday that the talks ended with no real progress, and that the new tariffs will take about 2 months to implement as the USTR is now talking to US firms on timing and a list of goods to be selected.
Here is what we are looking at for imports from China. The new tranche of goods to be taxed to 25% will be cellphones which total about $43.2 billion, then laptops at $37.5 billion and of course the total being somewhere between $300 and $325 billion dollars.
Because these parts are sourced around the world, then assembled into tech products in China, this supply chain issue is clearly impacting Vietnam, Japan, South Korean and Taiwan as well. Companies like the Taiwan born and raised Hon Hai Precision Industry is now moving its tech manufacturing – parts – to India to diversify its supply chain and lower risk in trade wars.
And with 40% of all tariffs that are being implemented being placed on consumer goods, these new hikes in tariffs will hit buyers of cellphones, laptops and cameras. Information technology and toys will also be impacted in the form of higher prices. More on this topic at the start of next week.