Get Ready to Pay A Lot More for Your Favorite Gadget

The trade war will hit you where you live

Illustration of a man holding out a large bag of money to a retail clerk holding a Google phone

​ Lifewire / Lance Ulanoff

If you want to stop a dinner party cold, start talking about tariffs. They’re at the top of the news and an obsession of the current U.S. President, but, as penalties governments levy on each other when they see a trade imbalance, they feel far removed from our everyday lives and something not worth discussing.

Now, if during our dinner I told you that your next smartphone might cost you an additional $70 and your daughter’s next game console might cost almost $60 more, you might spit out your creamed spinach.

I would, after cleaning up, explain a hard truth: Esoteric economic strategies, which heads of state handle like commanders playing with toy figures on a table-top battle surface, often have very real consequences for regular people like you and me.

China, which has the world’s largest economy and is the world’s largest exporter of goods, sends 18 percent of those exports to the U.S. Stuffed inside those iconic shipping containers, usually stacked like colorful blocks on giant freighters, are millions of smartphones, computers, tablets, games systems, and other electronics.

Take a good look at your phone, laptop, TV, camera (and just about anything else you own), and the majority of it will have that “Made in China” stamp.

Out of Whack

Made in China sticker on a consumer electronic good
Getty Images

This trade imbalance is what has the Trump Administration in a tizzy and, in addition to trying to encourage companies like Apple to produce more of its goods inside the U.S. (either on their own or with partners like Foxconn), the administration is negotiating a new trade deal with China.

However, in lieu of that, the U.S. government has already imposed tariffs on Chinese-made goods and is set to add significantly more if the two sides don’t reach an agreement.

I know, by now you’ve put down your knife and fork, left the table and are probably considering driving back home. But hear me out.

Out of Your Pocket

A few days ago, the Consumer Technology Association, a U.S.-based trade group that also runs the yearly tech-bacchanalia known as the Consumer Electronics Show in Las Vegas, released a report that, while not outwardly critical of tariffs, paints a grim picture of what will happen to our pocket books if the tariffs go through.

The results “show that, even accounting for alternative sources of supply, the proposed tariffs would have a substantial negative impact on American consumers,” reads the report.

In short, the prices for everything from smartphones to tablets, laptops, and video game consoles will rise by double digit percentages. Put simply, not China, not the U.S. government, and not even the companies that manufacture these products in China will pay for those multi-billion-dollar tariffs.

You will.

According to the CTA’s report, laptop prices will rise an average of 19 percent. Tablet prices will rise $50 on average. Worse yet, increased prices will be a major turn off for U.S. consumers (as if this was a surprise to you). The CTA is predicting, for example, that U.S. smartphone consumer purchases will fall by 28 percent.

Who Pays

Shipping containers at an airport with a jet flying by
 Getty Images

It’s true, the CTA’s report is designed to protect U.S. technology businesses, but there’s also a lot of logic in it. How often do companies simply absorb higher manufacturing, shipping or supply costs? They don’t. Look at gasoline prices and you understand how this works. When supplies are high and cheap, gas prices plummet. The second prices rise and supplies dry up, your price per gallon goes up.

In a few months, virtually all major consumer electronics manufacturers will release new products, many positioned for purchased during the holiday season. If they’re all 20 to 30 percent more expensive than a year ago, there are likely to be fewer gifts under the tree and beside the Menorah.

There are some hopeful signs here. Tech companies have warned officials of the damage these tariffs could do to American businesses, especially since there aren’t many other viable sources for most of these kinds of products.

In addition, the U.S. and China might be very close to a trade agreement, one that could wipe out the tariffs and leave the price of your favorite gadgets alone.

In the meantime, if you're thinking about buying, say, a new tablet, you have some choices and decisions to make. You can wait this whole tariff mess out and hope that the two sides kiss, make up, and leave your tech prices alone. You can be proactive and buy your tablet now, before prices rise. You could also just ignore the whole thing, knowing that tariffs applied this year might not impact consumer electronics prices, and the price of your wished-for tablet, until next year. That’s a reasonable plan as long as tech companies don’t decide to proactively raise prices now to prepare for the big tariff future.

I know, I all but ruined this meal, but I thought you’d want to know why you might have to save a little longer to buy Apple’s next iPhone. Now go ahead and enjoy your dessert.