Domestic Electronics Manufacturers Grappling with Higher Costs from U.S. and Chinese Tariffs

On average, surveyed U.S. electronics companies report they have seen tariff increases on 31% of the total dollar value of the products they import.

According to a member survey conducted by IPC from September 25-October 2, almost 90% of U.S. electronics manufacturers are troubled by the higher tariffs imposed by the U.S. and China on each other’s imports. In addition, some domestic electronics manufacturers are investing less in the U.S. and hiring fewer workers as a result.

Survey results include:

On average, companies report they have seen tariff increases on 31% of the total dollar value of the products they import. Twenty-five percent of companies report over half of the dollar value of the products they import are facing higher tariffs.
Some 69% of companies report lower profit margins as a result of increased tariffs, with a ripple effect of negative consequences: 21% report they are reducing investment in the U.S., and 13% say they are cutting back on hiring and/or reducing headcount.
More than one-third of companies report they cannot increase their prices to cover the cost of higher import tariffs, due to various factors.
Fifty-one percent of responding companies report they are now sourcing from countries other than China as a result of increased tariffs on Chinese imports.

“As the IPC research documents, rising tariffs are putting a painful squeeze on many U.S. electronics manufacturers,” said Shawn DuBravac, chief economist for the IPC. “Many are facing supply-chain disruptions and steeper costs from the tariffs that have been imposed to date, and the impacts will grow as the trade war drags on.”

“Our industry has longstanding concerns about some of China’s industrial policies, including government subsidies and intellectual property violations,” said John Mitchell, the IPC’s president and CEO. “But addressing unfair trade practices by ratcheting up tariffs is like using a sledgehammer to make orange juice. In both cases, it’s the wrong tool and makes a mess of the job.

“We call on the governments of the United States and China to de-escalate the tariffs, focus on results at the negotiating table, and conclude agreements that address long-standing issues of concern to both sides. We also call on all members of the World Trade Organization to restore that body’s ability to play its role as arbiter of international trade disputes, so that nations won’t feel a need to resort to tariffs to resolve trade disputes.”

For more information, visit www.ipc.org.