Several of President Donald Trump’s tariffs came into force Tuesday, including the latest levy on imports from China.
Imports from China, a major producer of smartphones, their parts and other technology, were hit with another 10% tariff. That built upon a 10% levy the president already imposed on the country in early February.
In addition to the new tariff on imports from China, the administration also implemented tariffs on imports from both Canada and Mexico, ending the month-long pause on those levies.
The move has raised questions about how consumer prices for new smartphones could be affected in the short-term and the longer-term by the tariffs, particularly the levy put on imports from China.
WARREN BUFFETT SAYS TARIFFS ARE AN ECONOMIC ‘ACT OF WAR’: ‘TOOTH FAIRY DOESN’T PAY ‘EM’
Roughly 78% of the U.S.’s smartphone imports come from China, the Consumer Technology Association has said.
RKS Design founder Ravi Sawhney told FOX Business consumers are “unlikely to see a noticeable price increase” for smartphones “in the immediate term” from the tariffs, explaining that “most smartphone manufacturers plan inventory and pricing strategies months in advance, so existing stock already in the market won’t be affected.”
He added that companies “often absorb short-term cost increases rather than immediately passing them on to consumers to remain competitive.”
Crowell Global Advisors Global Life Sciences Chair Joseph Damond offered a similar perspective on short-term smartphone prices, saying consumers may not immediately face a hike “because there will be a lag before increased tariff costs have a direct impact on production and sale of new phones, and because in the short run various parties along the production and distribution chain may be more willing to bear some reductions in their profit margins, until they see whether the tariffs will last.”
“If the sellers believed that the tariffs were only going to be temporary and are being used as a negotiating tactic, they may not raise their prices immediately,” Scott Baier, chair of the John E. Walker Department of Economics at Clemson University, told FOX Business. “However, if the tariffs are believed to be permanent, firms may want to raise their prices. If consumer demand is not too sensitive to changes in the price, then much of the tariff will be passed onto the consumer.”
Meanwhile, economist Michael Szanto suggested the tariffs could lead to a “moderate effect on the price of smartphones in the near future.”
“Last set of Trump tariffs from his first term largely exempted Apple iPhones which are largely assembled in China, but Wall Street is concerned this time could be different,” he said.
Smartphone prices “likely” could go up in the medium-term, according to Damond, but producers “may take steps to move production to countries not affected by tariffs in an attempt to mitigate cost increases” longer-term.
“If these tariffs remain in place, we could see gradual price increases over the next several months,” Sawhney also predicted for the longer-term. “Manufacturers will either absorb higher production costs, shift supply chains, or pass costs directly to consumers.”
He told FOX Business consumers could potentially see “flagship devices” become more expensive or “reduced promotions and trade-in incentives,” as well as companies looking into “more aggressive nearshoring strategies” to boost production in countries like Vietnam or India.
Baier also indicated companies could pursue relocating smartphone manufacturing sites from China as part of their longer-term response to the tariff on that country.
“Even if some of the rare earth materials, semiconductors, batteries, and other component parts are produced in China as long as there is enough value-added through other components and assembly in other countries,” he predicted. “When the goods are shipped from another country to the United States, it may not be subject to tariffs even though it has some components produced in China. The United States Customs and Border Protection assesses whether a good has been transformed enough to avoid the tariff.”
The tariffs could potentially lead to a trade war, according to Szanto.
“The other thing to watch out for is the growing tensions with a potentially hostile Communist China is the growing military threat to Taiwan,” he also said, noting many of the “most advanced” CPUs for smartphones come from there.
Globally, there were 1.24 billion shipments of smartphones by manufacturers over the course of 2024, according to a report from the International Data Corporation.
In the U.S., 91% of American adults were owners of smartphones in 2024, Pew Research Center found in a survey last year.
TRUMP SAYS TARIFFS ON ‘EXTERNAL’ AGRICULTURAL PRODUCTS TO BEGIN APRIL 2
When Trump unveiled the tariffs against Canada and Mexico and the initial levy against China in February, the White House said it was seeking to push the three countries to take steps to curb drugs and illegal immigration from coming into the U.S.
The president unveiled plans for the extra tariff against China late last month.
