Study: Laptop, Cell Phone Prices to Surge If China MFN Revoked
Ending most favored nation status for Chinese imports -- as advocated for by the House Select Committee on China and some other China hawks in Congress -- would increase consumer prices for laptops and smart phones by more than $100, and cause purchases of those goods to fall sharply, according to a recent study commissioned by the Consumer Technology Association.
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Although the tariffs would go from 0% to 35% on these goods, the rise in costs to consumers would be about 15% for phones and about 22% for laptops, the study estimated. Some phones are made in South Korea and India, and that is figured into the overall average.
Other goods would see smaller increases -- $39 for tablets, $12 for video game consoles, about the same for televisions, which face a 3.9% tariff in countries that are not free trade agreement partners. (Mexico is the #1 export source of TVs.)
China was the source of 92% of U.S. imports of laptops and tablets in 2022; 90% of imports of video game consoles; 79% of imports of smartphones; and 75% of imports of monitors, the report said.
The report notes that Congress might choose to create a China-specific tariff schedule, instead of moving to column 2 tariffs, and said "Congress would have to negotiate all the tariff rates and would be under great pressure to set them as high as possible." Former U.S. Trade Representative Robert Lighthizer, who is advising his old boss, Donald Trump, in his third run at the White House, has argued that column 2 tariffs are not high enough to contain the Chinese threat to America's manufacturing base (see 2305180064).
The CTA warns that ending MFN status for China "would be a grave and economically disastrous action that far exceeds the ongoing Section 301 tariffs on $370 billion in imports. It would cover all imports from China. Those products already facing Section 301 tariffs would face much higher tariffs."
The study argues that even though Section 301 tariffs didn't lead to inflation in the first two years, the inflation that followed was partly due to the tariffs.
"If Congress and other policymakers choose to take the plunge, they should know how cold the water may be in advance. This analysis shows it may be much colder than they think -- or have been told by proponents of significantly raising tariffs on imports from China," the report said.