My Son Just Bought His College Laptop…

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T’was an HP that my son ordered, which was custom built and shipped straight from the factory in China to our doorstep. No notions that there may be any American manufacturing involved (like the Dells computers who first make their way to Texas to be shipped out from an American address). Fortune Magazine reports that

“Dell, HP, and Microsoft said they account for about half of the notebooks and detachable tablets sold in the U.S. Prices for laptops and tablets will increase by at least 19%—about $120 for the average retail price of a laptop [and game consoles!] — if the proposed tariffs are implemented, according to a study released this week by the Consumer Technology Association. The companies said they spent a collective $35 billion on research and development in 2018 alone, and tariff costs would divert resources from innovation while providing “a windfall” to manufacturers based outside the U.S. that are less dependent on American sales.”

So the Chinese exporters that Trump is trying to hurt are actually US companies. The profit shifting from China to the US are actually reducing US companies’ profits as the tariff reduces US companies’ profits relative to competitors who ship their computers to non US consumers (from China).

Here are the results from the study: After accounting for new tariff revenue, there is a net $8.1 billion loss for the U.S. economy, from cell phone and laptop tariffs alone, with most of the burden carried by U.S. consumers.

CELL PHONES:

  • Change in Price of Chinese Imports +22.0%
  • Change in Chinese Production -4.8%
  • Change in U.S. Production 0.0%
  • Change in Prices of U.S.-Made Cell Phones 0%
  • Change in U.S. Consumer Prices (from All Sources) +14.0%
  • Impact on Consumption -28.0%
  • Reduction in Consumer Spending Power $8.1 bill.
    Net Impact on U.S. Economy -$4.5 bill.

Laptops and Tablets

  • Change in Price of Chinese Imports +21.0%
  • Change in Chinese Production -7.0%
  • Change in U.S. Production +4.8%
  • Change in Prices of U.S.-Made Laptops/Tablets +6.5%
  • Change in Prices to U.S. Consumers +19.1%
  • Impact on Consumption -35.3%
  • Reduction in Consumer Spending Power $8.2 bill.
    Net Impact on U.S. Economy -$3.6 bill.