What Tariff Increases Mean for Your IT Environment

Tariffs became a central talking point during and after our last presidential election, and many see this talk as more than empty campaign promises. President Trump talked of setting tariffs as early as day one in office, but this seems to be pushed back as far March. Talks of increasing taxes as much as 60%, have importers scrambling to have their products reach the U.S. before these changes take effect. Electronics will be among the hardest hit goods.

Tariffs are taxes on imported goods and reflect a multitude of factors, including relationships between nations. The proposed tariffs include a 25% tariff on Mexican and Canadian imports, a 60% or greater surcharge on products from China, and blanket tariffs of 10-20% on goods from all other countries. Economists suggest that these tariffs would only be the beginning, and other countries will begin placing retaliatory tariffs of their own.

The proposed tariffs are a move to drive production back to the United States and reduce the trade deficit, but experts doubt their efficacy. The United States does not currently have the infrastructure to manufacture its own electronics at this time, and China and Taiwan in particular are the global source of many of the parts and components that go into production of these goods. Taiwan currently produces 90% of chips globally. Despite pouring billions into CHIPS act funding, the U.S. is nowhere near self-sustaining when it comes to electronics production.

When tariffs go up, this cost is passed onto the consumer. The Consumer Technology Association (CTA), examined the potential effect of these tariffs on consumer electronics, estimating that the tariffs, if implemented, would drive up average prices for laptops and tablets by 46%, video game consoles by 40%, and smartphones by 26%. Though enterprise IT hardware is very different than consumer hardware, production remains largely overseas, and IT leaders can expect prices to rise with the upcoming tariffs.

Tariffs will apply to a product’s country of origin, and while enterprises have been diversifying production for years, it may not help them in this case. Many have moved to Mexico for ease of entering into the North American market, but with the high tariffs proposed for Mexican imports, there may be production delays as manufacturers consider shifting production to other countries.

If these new tariffs go into effect, prices are going to increase, and buyers will be footing the bill. Buying on the secondary market helps buyers save 40-70% under normal circumstances, and savings may increase as the price of new hardware rises. Shopping on the secondary market is a way to save without sacrificing quality—many units on the secondary market are new in box, only one year behind the current model. Buying from a reputable reseller can help maintain your budget while dealing with unexpected price increases.

During the 2020 chip shortage, many IT leaders found that they could access the hardware they needed on the secondary market quickly, even as lead times stretched into months. While this is not even close to the scale of global trade interruption brought about by the COVID-19 pandemic, it may cause shortages and delays as vendors decrease stock or manufacturers shift production. The secondary market is home to equipment from all major manufacturers and can help you get the hardware you need when you need it.

CentricsIT promotes Secure Sustainability, championing the reuse and recycling of IT hardware. Extending the lifespan of electronics through reuse helps minimize e-waste and conserves valuable resources. Buying on the secondary market helps companies contribute to their environmental goals while maintaining a high level of quality.