Tech giant companies HP, Microsoft and Dell are seemingly bracing for the fallout of an inevitable upheaval of their main business apparatus via imminent tariffs of the new Trump Government. The dynamic shift looks to abound very soon and tech companies are already considering options like stockpiling inventory and placing urgent orders through, with the ultimate aim being the full relocation of all mass production to suppliers who are viewed as ‘non-hostile to the US.
Big Tech Companies Preparing Countermeasures To Mitigate Disruption In Supply Chain
With President-Elect Donald Trump’s second coming in the White House looming large, the biggest impact on the tech industry is expected to be the blanket tariffs that are widely believed to go into effect immediately. These tariffs will inevitably cause massive bumps in the price of imported products from countries like China, Taiwan, Mexico, and even Canada.
China is the biggest target that’ll receive the brunt of the tariffs. Should they happen, a walloping 60% hike will make the consumer electronics price points skyrocket. Essentially, businesses that rely on imported tech parts that are manufactured outside the US will be the ones paying for the hiked costs and ultimately this burden will be shifted to the customers, resulting in jacked-up pricing.
According to Asia Nikkei, to counteract the tariff situation for the immediate future, three major players in the tech industry, HP, Microsoft, and Dell, are now constantly in talks with their suppliers to bolster production and shipping. The demand is at an all-time high, so it makes perfect sense to capitalize on the situation to salvage the best possible financial outcome.
How 3 Tech Giants Are Vying Business Ahead With The Trump Tariffs In Effect?
We shall be individually discussing the strategies of the three tech companies; HP, Microsoft, and Dell, that are making moves to avoid paying the upfront charges for imports.
HP Plans To Significantly Increase Production Presence In Thailand
The IT giant HP has been quick to proactively get the jump on things before the Trump-proposed tariffs kick in by shifting production to Thailand. There is a factory already present that is leased and fully operational, with other facilities being considered by their local partners for both production and storage.
Dell Looking To Vietnam And Asian States For Assistance
Dell is no stranger to having reliance for its production other than China, as its presence in Vietnam is well-documented. Now, it seems Dell is looking to diversify its production to stop reliance on Chinese imports further by turning to other Southeast Asian countries. It’s a smart play to avoid the hefty levy of the incoming Trump administration tariffs.
Microsoft Considering Exiting China For Its Hardware Production
Following their own suit, Microsoft is looking to make the most of it by doubling down on its production orders for its cloud server component to China while simultaneously also planning the roadmap to exit its region reliance. The production business of Xbox and Surface tablet will move to other countries, but since the set-up is too large to close up in one go, Microsoft is planning to systematically do it in phases, with a full exit from China planned around the end of 2025.
What Will The Impact Of The Trump Tariffs Be On Consumer Electronics?
The people who hold a keen interest in tech or even a passing one might want to pay attention in the coming months. There is a strong perception and highly likely chance of local pricing of consumer electronics going sky high.
According to CTA, the going rates of smart devices, video-game consoles, laptops, tablets, computer accessories, and tech components like graphic cards will be extremely high.
The breakdown of the percentages was like this:
- Laptops and tablets will see a spike of 46% in comparison to current rates.
- The Video game consoles will get a 40% bump in prices.
- Smart devices, in particular smartphones, will be going up by 26% compared to the present.
The belief by economic pundits is that the tariffs will shift production outside of China, but they won’t bring it in-house to the United States. Conversely, if the tariffs manage to get production moved locally, the prices of consumer electronics might see a steep drop instead of a rise. Though do keep in mind this is all some informed guesses with ample information taken into account, the wait-and-see approach is best here to grasp what the future situation will be.
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