Microsoft, HP, and Dell are demanding suppliers to speed up their production to be ready for the "layer of tariffs" with the coming of President-elect Donald Trump.
Major US Companies Are Now Focusing On Production Relocation, Moving Away From Nations Deemed "Hostile" By The Trump Government
Well, it looks like the tech industry is expected to witness dramatic policy revisions with the change of administration in the White House, since the "Trump-era" will arrive with the imposition of harsh tariffs, one that will likely have drastic effects on the supply chain. For those unaware, Donald Trump has plans to implement tariffs on exports from countries like Mexico, Taiwan, and China, with up to 25% tariffs on all products, and with this move, the tech markets will likely be influenced the most.
Now, in a new report by Nikkei Asia, it seems like large tech giants, notably Microsoft, HP, and Dell, are reportedly pursuing "stockpiling" components to prevent paying additional costs coming their way. The report states that Microsoft has urged its suppliers to speed up production, mainly for its cloud-based products, and along with this, the firm has requested suppliers to move out of nations that will receive the tariff imposition.
Not just Microsoft but HP and Dell, two of the biggest PC manufacturers, have advised their respective suppliers to speed up production in the upcoming months, and both firms are formulating plans to reduce their dependency on Chinese suppliers, ultimately ensuring that the tariffs don't have a major impact on the company's overall revenue. The plan here is to relocate production facilities to new nations since the tariff policy seems imminent.
Previously, a report by CTA stated that the imposition of tariffs could lead to a massive price surge in consumer electronics pricing, mainly affecting phones, laptops and tablets, connected devices, video game consoles, and computer accessories. Here's what their findings revealed:
Across the board, the tariffs will cause significant price increases for U.S. consumers:
- Laptops and tablets by 46%
- Video game consoles by 40%
- Smartphones by 26%.
The research also shows that the 60% flat tariff on all imports from China will essentially drive production to other countries, not to the United States.
- CTA
While Trump may have his arguments in favor of the tariff policy, it will surely drive consumer interest away from the markets, leading to a potential downfall in revenue for US companies, which isn't in the interest of the US economy. We will have to wait and see what sort of impact the markets have once these tariffs come into play.
