Trump tariffs on Chinese goods could cost you $120 more for notebook PCs, say Dell, HP and CTA
- 21 June, 2019 04:09
Dell, HP, Intel, and Microsoft warned that Trump Administration tariffs levied on Chinese imports would raise laptop prices by as much as 19 percent or $120, no matter which manufacturer made them.
In a public comment attached to the proposed action filed Wednesday, the four companies cited a Consumer Technology Association report issued this week that said the tariffs would add about $120 to the average price of a laptop, beginning in the popular back-to-school and holiday seasons. Laptops purchased from Chinese manufacturers like Lenovo would cost 21 percent more, the CTA found.
“A price increase of that magnitude may even put laptop devices entirely out of reach for our most cost-conscious consumers," the four companies said in the joint statement. “At best, these consumers would continue using older models that do not enable the latest security features. At worst, a price increase would force some consumers to go without laptops altogether.”
The Trump tariffs would not be paid by China or the Chinese manufacturers themselves. Instead, if U.S. consumers wanted to buy a laptop that used Chinese components—any laptop, in other words—the price of the finished product would be higher, with the resulting costs passed along to consumers.
The tariffs would likely cause consumers and small businesses to hold onto their existing laptops for even longer, impeding sales from U.S. PC makers like Dell and HP. In particular, those companies derive most of their sales from the U.S. market—30 and 32 percent from Dell and HP, respectively. Apple, which didn’t sign the letter, receives 40 percent of its revenue from U.S. customers.
Acer and Lenovo receive just 20 and 15 percent of their sales, respectively, from the U.S., the companies wrote, meaning that they would face less negative impace than their U.S. competitors.
Microsoft, Intel, and the two PC companies wrote that transitioning to alternative sources of supply weren’t possible to avoid the tariffs. In particular, the three hardware companies use equipment that is made in China, they said.
Cell phones, video game consoles also affected
The CTA also estimated that U.S. consumers would pay 22 percent more for cell phones imported directly from China, or 14 percent overall. Assuming an average price of $492, that would translate into a $72 tariff for the phones alone.
Game consoles could also increase in price, with the tariffs adding $56 to the average console price of $294, or 19 percent, the CTA said.
The CTA’s methodology, explained in an appendix in its report, used a set of product-specific models, based on an accepted framework known as the global simulation models. It involves specifying global supply and demand for each set of goods produced by a particular country as the sum of individual (national) sources of supply and demand, the CTA said.