Trump’s Proposed Semiconductor Tariffs Will Make Electronics More Expensive in the US
U.S. President Donald Trump told reporters this week that he intends to expand the scope of tariffs to include automobiles, pharmaceutical products, and semiconductors. While the first two categories don’t directly impact photographers, the third would.
President Trump said the tariffs could reach 25% at the start and get significantly higher over time, CNBC reports. This would, all else equal, make it more expensive to manufacture many products, including computers, smartphones, video game consoles, and, of course, digital cameras.
Today, Bank of America estimated that Apple will need to hike the prices of its products by nearly 10% to offset Trump’s tariffs, per CNBC, and that doesn’t reflect proposed semiconductor tariffs — only tariffs currently in effect on goods from China. Apple will not be the only company that passes the buck to customers to preserve its bottom line — it is the standard expected move.
Mere talk of tariffs has real-world effects, whether they come to fruition. During Canon’s financial report last month, the company expressed worry about uncertainties with policy trends in the U.S. Canon is far from the only company whose financial plans are impacted by unpredictability in Washington D.C.
Concerning tariffs, their proponents tout their purported ability to protect domestic jobs, strengthen a nation’s economy, and generate additional government revenue the government with extra revenue. The President and his supporters claim that even if tariffs cause short-term harm to American consumers, they create long-term benefits, including protecting and creating jobs in the United States.
Meanwhile, opponents argue that tariffs disproportionately harm consumers because increased costs to domestic importers are just passed directly along to the consumer, in part or in full.
Critics of tariffs note that their burden falls heaviest on the most vulnerable citizens. A staggering 95% of economists surveyed last year by the Kent A. Clark Center for Global Markets believe “a substantial portion” of tariffs are borne by the consumers who live in a country that enacts tariffs through resulting price increases.
The current 10% tariffs on Chinese products have already demonstrated the inflationary effect of tariffs. Acer announced it would increase the price of its laptops in the United States by 10% starting in March, as The Telegraph reports. Despite what President Trump has said recently about tariffs — “tariffs don’t cause inflation” — they undeniably do cause inflation.
Trump is no stranger to tariffs, as he heavily utilized them during his first term in office, both for their oft-dubious economic gains and as a means of wielding political power against other countries.
Claims that tariffs benefit domestic industry can hold water in certain instances, such as when foreign or domestic companies can quickly restart or increase production within the United States. Companies across numerous impacted industries are already working on increasing American production.
However, there are always reasons why so much manufacturing has left the United States in the age of economic globalization (it’s cheaper to make a lot of things elsewhere), so increasing production in the United States to avoid tariffs does not necessarily prevent inflation but could, theoretically, strengthen an economy overall.
It’s also true that some manufacturing losses in the United States are due to expanding automation in production rather than replacing American workers with foreign ones. Tariffs cannot address that type of job loss.
During Trump’s first term, his aggressive tariffs did not significantly increase the number of American jobs in impacted industries or reduce the U.S. trade deficit. Even so, the Biden administration did not remove all of Trump’s tariffs and even instituted some hefty new ones. Tariffs have historically held power over politicians on both sides of the aisle.
When tariffs apply to semiconductors, as Trump plans, any potential benefits are much harder to realize. Companies cannot simply start making semiconductors in the United States — the infrastructure doesn’t exist and cannot pop up overnight. Companies were working on this before Trump was elected, thanks in part to the bipartisan CHIPS and Science Act Biden enacted in 2022, but are years away from realizing their American semiconductor dreams.
If Trump’s promised tariffs go into effect before manufacturing behavior adapts, they could affect over 90% of all semiconductors — about 8% are made in the United States — any increased costs will almost assuredly be passed directly to American consumers.
Image credits: Featured image created by Petr Kratochvil and published to the public domain.
