The Many Ways Tariffs Will Hit Your Electronics
Like the industry he covers, Shawn DuBravac had already had quite a week by the time IEEE Spectrum spoke to him early last Thursday, 10 April 2025. As chief economist at IPC, the 3,000-member industry association for electronics manufacturers, he's tasked with figuring out the impact of the tsunami of tariffs the U.S. government has planned, paused, or enacted. Earlier that morning he'd recalculated price changes for electronics in the U.S. market following a 90-day pause on steeper tariffs that had been unveiled the previous week, the implementation of universal 10 percent tariffs, and a 125 percent tariff on Chinese imports. A day after this interview, he was recalculating again, following an exemption on electronics of an unspecified duration. According to DuBravac, the effects of all this will likely include higher prices, less choice for consumers, stalled investment, and even stifled innovation.
How have you had to adjust your forecasts today [Thursday 10 April]?
Shawn DuBravac: I revised our forecasts this morning to take into account what the world would look like if the 90-day pause holds into the future and the 125 percent tariffs on China also hold. If you look at smartphones, it would be close to a 91 percent impact. But if all the tariffs are put back in place as they were specified on Liberation Day," then that would be 101 percent price impact.
The estimates become highly dependent on how influential China is for final assembly. So, if you look instead at something like TVs, 76 percent of televisions that are imported into the United States are coming from Mexico, where there has long been strong TV manufacturing because there were already tariffs in place on smart flat-panel televisions. The price impact I see for TVs is somewhere between 12 and 18 percent, as opposed to a near doubling for smartphones.
Video-game consoles are another story. In 2024, 86 percent of video-game consoles were coming into the United States from China. So the tariffs have a very big impact.
That said, the number of smartphones coming from China has actually declined pretty significantly in recent years. It was still about 72 percent in 2024, but Vietnam was 14 percent and India was 12 percent. Only a couple years ago the United States wasn't importing any meaningful amount of smartphones from India, and it's now become a very important hub.
It sounds like the supply chain started shifting well ahead of these tariffs.
DuBravac: Supply chains are really designed to be dynamic, adaptive, and resilient. So they're constantly reoptimizing. I almost think of supply chains like living, breathing entities. If there is a disruption in one part, it's like it lurches forward to figure out how to resolve the constrain, how to heal.
We make these estimates with the presumption that nothing changes, but everything would change if this 125 percent were to become permanent. You would see an acceleration of the decoupling from China that has been happening since 2017 and accelerated during the pandemic.
It's also important to recognize that the United States isn't the only buyer of smartphones. They're produced in a global market, and so the supply chains are going to optimize based on that global-market dynamic. Maybe the rest of the chain could remain intact, and for example, China could continue to produce smartphones for Europe, Asia, and Latin America.
How can supply chains adapt in this constantly changing environment?
DuBravac: That, to me, is the most detrimental aspect of all of this. Supply chains want to adjust, but if they're not sure what the environment is going to be in the future, they will be hesitant. If you were investing in a new factory-especially a modern, cutting-edge, semiautonomous factory-these are long-term investments. You're looking at a 20- to 50-year time horizon, so you're not going to make those type of investments in a geography if you're not sure what the the broader situation is.
I think one of the great ironies of all of this is that there was already a decoupling from China taking place, but because the tariff dynamics have been so fluid, it causes a pause in new business investment. As a result of that potential pause, the impact of tariffs could be more pronounced on U.S. consumers, because supply chains don't adjust as quickly as they might have adjusted in a more certain environment.
A lot of damage was done because of the uncertainty that's been created, and it's not clear to me that any of that uncertainty has been resolved. Our 3,000 member companies express a tremendous amount of uncertainty about the current environment.
Lower-priced electronics have thin margins. What does that mean for the low-end consumer?
DuBravac: What I see there is the households that are constrained by financials, they're often the consumers of low-price products, and they're the ones that are most likely to see tariff cost pushed through. There's just no margin along the way to absorb those higher costs, and so they might see the highest percentage pricing.
A low-price laptop would probably see a higher price increase in percentage terms. So I think the challenge there is the households least well positioned to handle the impact are the ones that will probably see the most impact.
For some products, we tend to have higher price elasticities at lower price points, which means that a small price change tends to have a big negative impact on demand. There could be other things happening in the background as well, but the net result is that U.S. consumers have less choice.
Some companies have already announced that they were going to cut out their lower-priced models, because it no longer makes economic sense to sell into the marketplace. That could happen on a company basis within their model selections, but it could also happen broadly, in an entire category where you might see the three or four lowest-priced options for a given category exit the market. So now you're only left with more expensive options.
What other effects are tariffs having?
DuBravac: Another long-term effect we've talked about is that as companies try to optimize the cost, they relocate engineering staff to address cost. They're pulling that engineering staff from other problems that they were trying to solve, like the next cutting-edge innovation. So some of that loss is a potentially a loss of innovation. Companies are going to worry about cost, and as a result, they're not going to make the next iteration of product as innovative. It's hard to measure, but I think that it is a potential negative by-product.
The other thing is tariffs generally allow domestic producers to raise their price as well. You've already seen that for steel manufacturers. Maybe that makes U.S. companies more solvent or more viable, but at the end of the day, it's consumers and businesses that will be paying higher prices.