Laptop, smartphone, and game console prices could soar after the election

Tech companies are bracing ahead of the US presidential election, dreading the looming threat of more tariffs that could further restrict the flow of imports from China, no matter which candidate is elected.

Tariffs are a tax placed on imports and are intended to disrupt trade with foreign adversaries. While former President Donald Trump has frequently claimed that China pays for tariffs, in actuality, that tax is paid by US businesses and citizens any time they want to purchase a restricted good from China.

Used as a trade barrier, tariffs can place an economic burden on countries like China, but that burden is really only felt if businesses and consumers avoid importing goods. If companies cannot cost-effectively or practically switch suppliers—as is the case with China, which is a dominant global manufacturing hub in the tech industry—shrinking profit margins can trigger US businesses to spike prices for consumers.

So ahead of the election, many tech companies are worried they may eventually have no choice but to cover increasing costs from tariffs by increasing prices on common products, including smartphones, laptops, tablets, and video game consoles.

There are currently more than $300 billion worth of tariffs burdening trade with China. They are supposedly targeted to address national security concerns and protect against China's unfair trade practices harming US intellectual property, technology transfer, and innovation, but experts have warned that some tariffs seem to be motivated by political grandstanding.

Most of these expansive tariffs were initially implemented by Trump through a series of executive actions starting in 2018. But they were then made permanent by President Joe Biden's administration last May. They applied not only to nearly 50 percent of finished consumer technology products but also to the components that are necessary to make those products in the United States, forcing tech companies to either pay up to continue doing business with China or find another way to sustain their supply chains while keeping prices low.

Also in May, Biden announced new tariffs on imports like electric vehicles, semiconductors, battery components, and critical minerals used in tech manufacturing, as well as new limits on the amount of cheap foreign goods shipped into the US tariff-free, like products from Temu or Shein.

However, across all the tariffs the US has implemented, there are currently no tariffs on the most popular consumer technology products, despite US goals to prevent technology theft.

That's partly because the Consumer Technology Association (CTA) joined big brands like Microsoft, Nintendo, and Sony in successfully opposing Trump's efforts to place tariffs on America's favorite devices in 2019.

Their pressure campaign worked. The Trump administration carved out certain exemptions from tariffs protecting popular tech, of which "the most prominent was the desire to exclude tens of billions of dollars of smartwatches (e.g., Fitbit and Apple Watch)," Peterson Institute for International Economics senior fellow Mary Lovely testified to Congress earlier this year.

In an open letter to the United States Trade Representative, the tech industry warned that "taxing" the country's bestselling tech would hurt Americans. For example, a CTA study showed that if the tariffs were imposed, prices for video game consoles could immediately shoot up by 25 percent. That would put "a new video game console out of reach for many American families" and collectively cost consumers who could afford the jump "$840 million more than they otherwise would have," CTA projected.

Ultimately, the proposed 15 percent tariffs on consumer tech would injure consumers, workers, retailers, and manufacturers while risking "thousands" of US jobs and stifling innovation, the CTA warned.

"The result is a net $350 million loss for the US economy for each year the tariffs remain in effect, with the burden carried by US consumers," CTA's study concluded. And that study just outlined the threat to the video game industry and did not account for ripple effects in other industries that benefit from game industry innovations, such as health care, retail, and education.

Fast-forward to today, and consumer tech appears to be back on the table as both candidates keep China in their crosshairs as they vie for the next presidency.

On the campaign trail, Trump has vowed to resume his trade war with China, threatening a 60 percent tariff on all goods from China. That's four times more than the tariffs that sparked a tech industry panic during Trump's last time in office. And while Harris has criticized Trump's tariffs as being too "sweeping," she has avoided detailing her plan for tariffs while maintaining a similarly strong stance against China. Harris remaining vague while campaigning worries tech companies trying to predict what the next administration will bring, CTA Vice President of International Trade Ed Brzytwa told Ars—especially given Biden's trade tactics echoing Trump's by expanding tariffs this year.

"She has called out [Trump's] sweeping approach to the tariffs and national sales tax that would harm consumers and households, people at the lowest end of the economic spectrum and the United States," Brzytwa said. "But what she hasn't done is disown the current tariffs on the imports of China, which have also been harmful."

So if Harris wins and resumes Biden's supposedly more strategic approach to tariffs, tech companies already feeling heavily burdened expect they would be stuck with extra costs under her administration, too.

"What neither party really acknowledges is that the tariffs do cause harm to individuals," Brzytwa said. "They're regressive taxes that harm people of little means more than they harm the wealthy."

Laptop prices could nearly double under Trump

For years, tech companies have shielded consumers from bearing the brunt of these increasing trade costs, which is partly why many Americans may not realize that casting a vote this fall could potentially determine how much or little prices on popular consumer technology could rise over the next four years.

Because Harris hasn't been clear about her plans for tariffs if elected, Trump's threat of a 60 percent tariff on all Chinese goods is perhaps the clearest worst-case scenario for tech companies preparing to adapt as administrations shift.

Peterson Institute's Lovely broadly crunched the numbers in the event of a Trump win. She co-authored a report in August, estimating that it would cost "a typical US household in the middle of the income distribution more than $2,600 a year" if Trump takes office and follows through on his tariff plans, which also include a 20 percent universal tariff on all imports from anywhere.

Both campaigns responded to the study, Lovely told Ars, with Trump rejecting input "from so-called experts" and Harris seeming more open to considering the findings. But Lovely expects that Harris is unlikely to embrace diplomacy and shift away from taking a "strong stance against China" since that is "kind of what's required today politically."

In May, Lovely shared additional findings at a hearing held by a Congressional committee dedicated to monitoring US-China relations. At the hearing, she reiterated that Trump's proposed tariffs and tax cuts would likely hurt low-income Americans the most.

In her testimony, Lovely warned that the current tariffs imposed by Trump and upheld by Biden are not targeted enough to meet US objectives of preventing technology theft. If the US wanted to be strategic, it would probably place tariffs on popular tech rather than seemingly arbitrary products like T-shirts or syringes, the thinking goes.

"Tariffs are a regressive tax that falls more heavily on less affluent Americans," Lovely told Congress. "How can it be fair that tariffs are levied on products sold at Walmart but not on fancy computers sold at specialty stores?"

If the US did impose tariffs on all tech products viewed as key to US market dominance and national security, lawmakers would have to confront any backlash from the public head-on. That "will undoubtedly have costs for American consumers and firms," and those "burdens should be acknowledged as the cost of protecting US interests in these sectors," Lovely told Congress.

"If technology is your main complaint against China, then you've got to suck it up and say to the American public, 'We're taxing those things,'" Lovely told Ars, instead of deluding Americans into believing that tariffs are good for them, "which is exactly what's happened."

Just this month, the CTA attempted to grapple with anticipated tech industry harms, releasing a report finding that Trump's proposed tariffs "will cause significant price increases," potentially nearly doubling the price of laptops. Video game console prices may rise by 40 percent, the report estimated, and smartphones by 26 percent.

Many industries will immediately be shocked, potentially redirecting resources away from research and development, as production is driven to other countries like Mexico, Vietnam, or India in efforts to keep the prices low as business costs go up, Brzytwa told Ars.

Currently, tech companies—including small businesses, startups, and tech giants—are struggling to figure out supply chain alternatives while the costs of doing business with China keep increasing, and each new administration shifts the goalposts.

"I don't think many people realize," Lovely told Ars, that there are "no tariffs on computers and cell phones," but if "Trump goes ahead with his so-called flat 60," then "you're going to see a very, very, very strong response in the US to that."

It's a substantial tax to suddenly place "on the profits of an Apple, HP, or Dell" product, Lovely said.

The CTA has been closely monitoring the campaigns and conducted two studies showing that Trump's plan would trigger "clear and high price increases for things like smartphones, laptops, and tablets and video game consoles, among other products."

Brzytwa told Ars that the CTA will not sit by if either candidate moves to tax the tech sector more, confirming that the CTA will "continue to be explicit" about any proposed tariffs specifically "because of the consumer impacts."

"At that point, it's prohibitive" to do business with China, Brzytwa told Ars, suggesting that Trump's proposed tariffs are about "blocking imports," not safeguarding American tech.

How soon would tech prices increase?

It's unclear how quickly prices would rise if Trump or Harris expanded tariffs.

Lovely told Ars that "it's really up to the manufacturers, how fast they pass through the prices." She has spoken to manufacturers using subcontractors in China who "say they're in no position to move their business" "quickly" to "someplace else."

Those manufacturers would have a difficult choice to make. They could "raise prices immediately" and "send a very clear signal to their customers" that "this is because of the tariffs," Lovely said. Or they could keep prices low while scaling back business that could hamper US innovation, as the CTA has repeatedly warned.

"I think I would just say, 'Hey everybody, you elected this guy, here's the tariff,'" Lovely said. "But some might decide that that's not the best thing."

In particular, some companies may be reluctant to raise prices because they can't afford triggering a shift in consumer habits, Lovely suggested.

"Demand is not infinitely elastic," Lovely told Ars. "People will say, 'I can use my cell phone a little longer than every three years' or whatever."

Tech industry strategist and founder of Tirias Research, Jim McGregor, told Ars that if Trump is elected and the tariffs are implemented, impacts could be felt within a few months. At a conference this month, Trump's proposed China tariffs were a hot topic, and one tech company CEO told McGregor that it's the global economic X-factor that he's "most worried about," McGregor told Ars.

On top of worrying about what tariffs may come, tech companies are still maneuvering in response to Biden's most recently added tariffs, analysts noted.

In May, McGregor warned in Forbes that Americans will likely soon be feeling the crunch from those tariffs, estimating that in the "short term," some tariffs "will drive up prices to consumers, especially for consumer electronics, due particularly to the tariffs on chips, batteries, and steel/aluminum."

Staring down November 5, it appears that most tech companies can't avoid confronting the hard truth that US protectionist trade policies increasingly isolating China are already financially burdening American consumers and companies—and more costs and price hikes are likely coming.

"It just doesn't look good," Brzytwa told Ars.