Trump backs off on electronics tariffs

In response to the continued stock market problems and possibly pressure on the technology industry, US President Donald Trump retracted the customs tariff for electronics late last night.

In a document of the American Customs and Protection issued on Friday, the United States has now gave these consumer electronics, many of which are manufactured in China and are subject to 145 % of the customs tariff in addition to a 10 percent global tariff. The semiconductors will be, which are used in almost everything because the chips are the basis of all electronic devices – also exempt.

By doing this, Trump returns to more with the advice of the technological economy in force, as the customs tariff for such devices may cut a lot of modern American economy. But it remains to see whether this will restore the investor’s confidence in the wider market, because the inability to predict the Trump number towards trade allies is concerned with anxiety like his actual decisions. The stock market has decreased by 15 % since Trump took office.

This could be a great break for electronics makers like Nintendo, which was concerned about the impact of the definitions on the launch of Nintendo Switch 2 on June 5.

Some analysts have warned that the iPhone worth $ 1,000 may have to sell at $ 3500 if made in the United States, but this ignores the fact that the United States, with only 14 % of the global market that was a leader in the fifties, may not be able to provide enough chips to companies like Apple, which is the most valuable technology company. However, the definitions would affect technical products in several different ways.

The Consumer Technology Association estimates that customs tariffs can make the game keyboard to 40 % more expensive for American consumers, with a 26 % increase in prices for smartphones and 46 % increase for laptops. But that was before Trump decided this week to put the largest tariff on China.

The process of losing its share in the market in the chips occurred for decades with the rise of companies such as Tawan’s TSMC, and the process of restoring the market share can not be repaired only by operating the customs tariff, based on an interview with it with Scott Almassy, ​​a partner with a consulting and accounting company PWC, in December.

Al -Masi said: “Where you really start obtaining the effect on materials, commodities, steel and aluminum, and the things that enter the beginning of supply chains that build things not up to $ 500, $ 600, $ 700.”

Trump said he was still considering the sectoral tariffs of some commodities – including semiconductors. The transition to retreat still a temporary victory for companies like Apple, which pledged to build more electronics in the United States, but my interview with Deloitte in January suggested that such a process may take decades to complete it, and it is best to do this through the benefits that match with what foreign governments do in helping factories outside the ground for multiple parties.

Duncan Stewart, Director of TMT Research at Deloitte, indicated earlier that building chips factories with subsidies from the United States Chips and Sciences law will be great, but even tens of billions of dollars of this legislation hardly move the needle in re -manufacturing to the United States

“After all the plants that are built, started and start, at the end of all of this, by 2032, the United States may rise about 14 % or something like this. It takes time. It’s a very huge industry. Stir the needle from 10 % to 14 % is actually a significantly good number. It is a sign of the difficulty of moving.

The complexity of supply chains is something else that must be taken into account. When Intel took control of the American chips market (as well as Globe), it was part of the reason that he had the best manufacturing factories in the United States to reduce their costs, but they lagged into the design of chips, while giving an opening to companies like Nvidia. NVIDIA TSMC has used in Taiwan to make chips, but NVIDIA is a leader in the use of parallel in graphics chips for use in new applications such as artificial intelligence processing in data centers. If TSMC is not large or good as it was, NVIDIA will not be able to bypass Intel and push AI to be the largest chips sector. This means that manufacturing in the original country is not the only thing that matters to creating job opportunities.

Some politicians can be concerned about the impact of pressure on the technology industry, but from the fact that the industry creates the type of high -value jobs that any economy needs in the modern era. The industry must employ educated and specialized persons, and this requires more education. However, places like China turn into much more engineers than the United States, where mathematics and science teaching falls backward.

However, the Trump administration believes that this week’s tariff pain aims to start this process and restore American competitiveness.

“President Trump has explained that America cannot rely on China to manufacture important technologies such as semiconductors, chips, smartphones and mobile computers,” said Trump’s spokesman. “For this reason, the President has secured trillion dollars from US investment from the largest technology companies in the world, including Apple, TSMC and NVIDIA. In the direction of the president, these companies stumble on their beach in manufacturing in the United States as soon as possible.”

It is clear that the definitions alone will not solve the trade defect with China.