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US Tariffs Now Include Wireless Routers, China Responds

Source: Netgear

Tech companies received some good news and some bad news from the White House on Monday. The good news was that officials changed the list of items affected by tariffs on goods imported from China to exclude smartwatches and other Bluetooth devices. The bad news was that "network router-type products" were added to the list of affected products and that addition could have serious implications for businesses, an official told CNN.

Placing tariffs on wireless routers would raise costs for tech companies in several ways. Companies that sell wireless routers would be directly affected, for example, simply by virtue of their business. Yet even companies that don't sell routers would be affected because they need to use them for their existing infrastructure. Tech companies have to go online; making it more expensive to do so causes a clear financial problem.

U.S. tariffs on Chinese goods have steadily expanded to include more types of product over the last few months. The first wave affected tech companies by including various transistors, PCBs, displays, and other components used in many devices. It was expected to affect $34 billion worth of goods. An updated list was going to include certain wireless devices, like Bluetooth speakers, but those items have been spared for now.

A later update threatened the semiconductor market and raised the estimated value of tariffed goods to $200 billion. According to a statement from President Donald Trump, if the Chinese government "takes retaliatory action against our farmers or other industries" in response to the tariffs, another $267 billion worth of goods will be added to the list. Saying that's a big leap from $34 billion would be underselling it.

But that doesn't mean China won't respond to the Trump administration's tariffs. The Associated Press reported that the Chinese government announced a "tariff hike on $60B of U.S. products in response to Trump duty increase in technology dispute." That doesn't quite compare to the $200 billion targeted by U.S. tariffs, but it shows that if the Trump administration wants a trade war, China's willing to get its hands dirty as well.

The prospect of a trade war has tech companies on edge. Tariffs would make it more expensive to develop and release new products, and if those costs aren't passed on to consumers, a company will either have to watch its profit margins dwindle or stop making affected products entirely. That isn't a hypothetical--a boutique case maker called CaseLabs shut down in August, with its CEO claiming that tariffs helped raise their costs by 80 percent.

The Consumer Technology Association published a statement in response to Monday's announcement. The group questioned whether or not the tariffs are actually legal--it said "Congress has not given the president or the USTR a blank check to pursue a trade war"--and expressed its hope that the Trump administration will rethink the tariffs. Here's the part of the statement addressing the good and bad in the latest tariff news:

“We appreciate the Trump Administration removing consumer connected devices, the largest tariff code CTA identified in our USTR comments. Retaliatory tariffs, whether 10 percent or 25 percent, are bad policy. We are especially concerned about retaliatory tariffs on printed circuit assemblies, routers and networking equipment. They will stifle our global leadership in 5G, create an internet tax on businesses and cause uncertainty for companies."

Introducing tariffs on goods originating from China is unlikely to help American businesses or consumers. It could have the opposite effect: products could become more expensive, companies might stop making specific goods, and some people could lose their jobs as their employers scramble to cut the effects the costs imposed by these tariffs could have on their business.

  • takeshi7
    "it said "Congress has not given the president or the USTR a blank check to pursue a trade war"

    It's almost as if giving every subsequent president more and more executive power is a bad idea and can definitely backfire. There's a reason our founding fathers tried to create a government with checks and balances.
    Reply
  • littleleo
    Winning with Trump and the Ruslians!
    Reply
  • mossberg
    21330635 said:
    Winning with Trump and the Ruslians!

    That's right, you would rather countries keep taking advantage of us, and taking jobs from Americans. We are winning. 4.2 GDP growth, unemployment is down, average middle class income is up, Europe is going to finally pay their share of NATO expenses, ect.
    Reply
  • g-unit1111
    21330878 said:
    21330635 said:
    Winning with Trump and the Ruslians!

    That's right, you would rather countries keep taking advantage of us, and taking jobs from Americans. We are winning. 4.2 GDP growth, unemployment is down, average middle class income is up, Europe is going to finally pay their share of NATO expenses, ect.

    One country is definitely taking advantage of us, and I won't say who but you can probably guess... :D
    Reply
  • acme64
    id really love to know where this extra revenue is going
    Reply
  • rabbit4me1
    Sounds like discrimination to me, since no apple products are on the list. Apples has the money and most their account offshore. Only fair to tax em too.
    Reply
  • g-unit1111
    21331163 said:
    Sounds like discrimination to me, since no apple products are on the list. Apples has the money and most their account offshore. Only fair to tax em too.

    Apple stopped manufacturing wireless routers years ago. But it will eventually come back around to them.
    Reply
  • lacmms
    Maybe we should start manufacturing some of these products here and put Americans to work. Ridiculous.
    Reply
  • Gillerer
    What's the reason manufacturing has moved to the far east? Cost.

    People who entertain delusions about the manufacturing moving to the US (or any high standard of living western country): Would you work for sub $1 per hour? Do you know anyone who would? People would prefer to work at McDonald's at that point.

    Or if the wages were higher, or the manufacturing was highly automated, the selling prices would need to at least double. Who'd buy these US made routers then, when competitors in far east (outside China) could still make them for the normal price? Maybe Trump can introduce tariffs against them, too.
    Reply
  • Gary_133
    @Gillerer Someone with a brain here, also I would like to remind people who's idea it was to move the manufacturing jobs OUT OF THE US.

    The higher ups do it without a gun pointed to their head and also knowing full well there is a 99% chance someone is going to steal their IP.
    Reply