1 week Ago By Ashley Belanger
On Wednesday, Donald Trump, once again, took to Truth Social to abruptly shift US trade policy, announcing a 90-day pause "substantially" lowering reciprocal tariffs against all countries except China to 10 percent. Because China retaliated— raising tariffs on US imports to 84 percent on Wednesday—Trump increased tariffs on China imports to 125 percent "effective immediately." That likely will not be received well by China, which advised the Trump administration to cancel all China tariffs Wednesday, NPR reported .
"The US's practice of escalating tariffs on China is a mistake on top of a mistake," the Chinese finance ministry said, calling for Trump to "properly resolve differences with China through equal dialogue on the basis of mutual respect." For tech companies, trying to keep up with Trump's social media posts regarding tariffs has been a struggle, as markets react within minutes. It's not always clear what Trump's posts mean or how the math will add up, but after Treasury Secretary Scott Bessent clarified Trump's recent post, the stock market surged, CNBC reported , after slumping for days.
But even though the stock market may be, for now, recovering, tech companies remain stuck swimming in uncertainty. Ed Brzytwa, vice president of international trade for the Consumer Technology Association (CTA)—which represents the $505 billion US consumer technology industry—told Ars that for many CTA members, including small businesses and startups, "the damage has been done." "Our small business and startup members were uniquely exposed to these reciprocal tariffs and the whipsaw effect," Brzytwa told Ars.
"There's collateral damage to that." In a statement, CTA CEO Gary Shapiro suggested that the pause was "a victory for American consumers," but ultimately the CTA wants Trump to "fully revoke" the tariffs. "While this is great news, we are hearing directly from our members that the ongoing additional 10 percent universal baseline tariffs and this continued uncertainty, are already hurting American small businesses," Shapiro said.
"CTA urges President Trump to focus his efforts on what he does best, dealmaking. Now is the time to reposition the United States with our allies as a reliable trading partner while growing the American and global economy." Trump pause isn’t necessarily a “good thing” Even though Trump's pause leaves time for US trade partners and allies to hopefully renegotiate trade deals that eliminate reciprocal tariffs, there's no promise negotiations will end in the kind of stable trade agreements that tech companies depend on while building global supply chains.
"Essentially, just because we're going down to 10 percent doesn't mean that that's a good thing," Brzytwa told Ars. "That tells us that there's still an interest in part of the administration of keeping a tariff in place for the entire world, and that still is harmful, especially for our small businesses and startup members. That environment of unpredictability and uncertainty undermines their ability to plan, to innovate, to succeed, to source.
" For the consumer tech industry—especially makers of laptops, smartphones, tablets, and game consoles—the tit-for-tat trade war with China is particularly threatening, since "China still is the predominant source of laptops, tablets, video game consoles, smartphones and monitors," Brzytwa said. Although many companies built up stockpiles of popular products to keep consumer prices low by limiting imports through Trump's negotiation phase, the CTA expects those stockpiles will "eventually dwindle," Brzytwa said. For some in the tech industry, the timing of the tariffs couldn't be worse.
Research firm Canalys estimated that PC makers will see lower demand later this year, with PC prices spiking just as PC makers hoped to increase sales by hyping AI features, Reuters reported . Even tech companies that promptly reacted to the CTA's most extreme forecast—estimating earlier this year tech industry impacts of 100 percent tariffs on China goods—weren't fully prepared for today's 125 percent tariffs to be announced. "None of it's good in the long run," Brzytwa told Ars.
"Americans are trying to buy affordable products before the tariffs really bite. And as those stockpiles dwindle, the companies will have to replenish the products that they have in their inventories to sell to the American consumer. And maybe at some point they will start having to pay the tariff or they will have to find ways to shift their supply chains incredibly quickly to other markets, and there's no guarantee that they can, and that also will be costly.
" CTA urges Trump to quickly end reciprocal tariffs Currently, the tech industry is left hoping that Trump's negotiations with countries other than China will go well, and potentially "lead to more stable, durable trade relationships...
but more importantly, to actual binding and enforceable trade agreements," Brzytwa said. Commerce Secretary Howard Lutnick has said that Trump's negotiations could potentially take weeks to resolve, a timeline that may be a relief to tech companies. Brzytwa told Ars that negotiations "better be quick" and not "drag on for months and months and months, leaving these tariffs in place," or else the tech industry's ability to innovate could be hampered.
A PwC analysis found earlier this month—prior to the pause, retaliations (including new tariffs on US imports to the European Union ), and increased China tariffs—that tariffs hitting the tech, media, and telecommunications industry could increase tenfold, from approximately $13 billion to approximately $139 billion a year. But all PwC could recommend was that tech companies consider "reassessing global sourcing options" and shifting the countries where they do business, neither of which can be quickly achieved in response to a Truth Social post likely moving markets fast. "We've been very supportive of the US government negotiating free trade agreements that are comprehensive in nature, covering all the issues to eliminate tariffs and other non-tariff barriers to trade," Brzytwa said.
"That's the direction we want the government to go in. That's good for US businesses and innovation in the long run and for our competitiveness and for our strategic relationships, the world." For now, Trump appears to be maintaining that arbitrarily imposing tariffs is the best way to spark negotiations, not just to influence deals with other countries, but with companies.
Ahead of announcing tariffs on semiconductors—which Brzytwa noted may possibly include tariffs on all imports containing semiconductors—Trump threatened the Taiwan Semiconductor Manufacturing Company (TSMC) with a 100 percent tax if it doesn't build chipmaking plants in the US, Reuters reported . Trump considers this approach superior to Joe Biden's CHIPS Act, which awarded TSMC billions to build plants here. "TSMC, I gave them no money.
.. all I did was say, if you don't build your plant here, you're going to pay a big tax," Trump said.
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