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Today’s business owners seem worried about how the latest tariffs on Chinese goods will affect them. They’re already causing the prices on products like computers, printers, servers, routers and modems to go up. As time goes by, the prices of other things will rise including appliances, autos and even the groceries we all buy at the store each week.

This list of goods included in the tariffs is a long one with an annual trade value of $200 billion. China is retaliating by imposing $50 billion in tariffs on American goods including metals, tobacco, electronics, computers, meat, fish, leather and many other items. How will it impact America’s economy? All experts agree that it will damage the U.S. economy.

How the Tariffs Shake Down

The Trump Administration imposed a 25 percent tariff on $50 billion worth of Chinese goods that began on June 15th, 2018. They stated that on July 6th, 2018 an additional $34 billion worth of goods would be subject to tariffs with another $16 billion worth of goods to be reviewed.

Luckily, a few items such as cellphones, pharmaceuticals, and toys are not on the list. But it does include many technology products. For instance, Apple has already been forced to raise prices on their popular products like the HomePod, Apple Watch, AirPods, and Beats headphones. Products and components for mobile networks were hit hard too. Prices on data storage devices, laptops, and other technology will gradually rise over the next 18 months.

Technology products that are manufactured and assembled in China, then exported to America include cell tower radios, circuit boards, modems, scanners and many others. Next January, the tariffs on these products will rise from 10 percent to 25 percent. Naturally, all retailers and manufacturers will be raising their prices to compensate. Small business owners will need to adjust the prices for their products and services as well.

In addition, investors will be impacted. With rising costs, the return on investment will decrease. Some investors will be reluctant to tie up their cash with diminishing returns.

How Will Manufacturing Costs Be Impacted?

Economists have found it difficult to nail down the effects on the manufacturing sector. This really all depends on what you’re manufacturing. If you need to import items for your process that are on the tariff list, then these items will cost 25 percent more. It may take some time to actually see how manufacturers respond. In many cases, the manufacturer will decide how to deal with rising costs. In industries where margins are slim, the damage could be significant. Items like steel, minerals such as quartz, and many others are on the tariff list. Consumers often don’t realize all that goes into manufacturing a simple product like a router, printer or modem.

Though some products have better profit margins than others, those with the smaller margins are the ones that will be most heavily hit.

What Is The Goal Of the Trump Tariffs?

Trump’s administration has stated that the goal of the tariffs is to get businesses to start using American factories, products and other resources. In the long run, this could help the American economy, though it may be years before that benefit is actually realized.

Some economists believe that the real target of the Trump administration is China’s “Made in China 2025” program. It has been hard to tell whether this program is simply a way for the country to encourage its business owners or if the goal is more nefarious. The program could be an indication that China is ready to take over more of the world’s manufacturing, thereby increasing its global outreach.

In 2017, it was reported that the Chinese economy was the largest in the world for the third year in a row. Others economists point out that China’s government cannot sustain this type of financial growth. For instance, their legal system does not support property owners the way an advanced nation should. Their Think Tanks are often weak and superficial. Their environment is declining due to extensive manufacturing facilities that do not have to adhere to environmental regulations.

How To Survive The Trade Wars

For business owners, now is the best time to make those larger purchases you’ve been thinking about. You could save 20%-30% on computers, large pieces of equipment, machines, and even smaller items like routers, printers, scanners and modems.

For consumers, this is also true. If you need to make a big purchase such as a car or appliance, it’s best to do so now. Though no one is really sure how much prices will go up over the next few years, they will definitely increase. If you need to purchase a new washing machine or stove, you can save money by moving now, before the price increases are realized.

National Networks works with businesses who need to make major equipment purchases by recommending products that will give you the greatest value for every dollar spent. If you need computers, printers, servers or other network equipment, we’ll help you choose the right products for your operations. As your IT service company, we may be able to get dealer discounts so you can save even more money.

National Networks serves Southwest Louisiana and Southeast Texas with professional managed IT services. For your convenience, we have offices in both Lake Charles, Louisiana and Nederland Texas. Contact us at (337) 474-4249 or (409) 724-0440.

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Published on 9th December 2018 by Shawn Maggio