While the United States government is studying a new tour of customs duties on imports, in particular those that turn to the technological sector, the fears between industry and economists and consumers are increasing. Although these commissions are politically presented as tools for economic strength or to negotiate documents in commercial wars, their actual results are often more realistic and closer to the life of individuals at higher prices, to the drop in the availability of devices and loose in innovation.
At the center of this potential crisis, the fact that most electronic devices today be produced through complex global supply chains. Smartphones, mobile computers, tablets and intelligent watches, even accessories such as headphones and hells, are no longer completely manufactured in a country. Rather, it depends on a network of suppliers in Asia, Europe and Americas. And when taxes are imposed on the basic components, such as Taiwan’s electronic chips, or South Korean’s display screens or Batteries from China, these costs do not affect only a specific part, but rather multiply through the production chain to reach the final consumer.
High prices: the first blow
The first concrete effect of customs tasks is the high prices of consumer products. Unlike local taxes, the commissions are imposed directly on the goods in their entrance point and these costs are generally loaded on the consumer. This means that the prices of smartphones or mobile computers, even wireless headphones, can concretely increase in the next period.
For example, if there is a mobile computer sold to $ 1,000 and the value of the imported components is 300 dollars, then imposing a 25 percent commission adds $ 75 to the cost of production. After adding profit margins along the distribution chain, the final sales cost can increase by $ 150 or more. Therefore, technological devices become less able to reach a large segment of consumers, which increases the digital gap, at a time when technology has become a daily necessity.
Power supply chains under pressure
Outside the prices, customs duties threaten the stability of global supply chains that have requested decades. The producers entrusted these networks to reach efficiency and reduce costs. But commercial barriers force them to reconsider their relationships with suppliers and redirect production to countries that are not covered by taxes. These transformations are expensive and complex and require excellent time and effort. From the creation of new production lines, to the evaluation of new suppliers and to the adaptation to various regulatory systems, which leads to a delay in supplies, the lack of some products or quality problems. The consumer may find a long wait to issue a new device or face a shortage of actions during important purchase seasons such as the return to schools or at the end of the year.
Innovation in the wind
Although the direct effect is measured by prices and availability, the greatest danger lies in the influence of innovation itself. Companies can withdraw investments in the role of research and development due to the high costs and instability of the commercial environment and can choose to focus on simple promotions of current products rather than risking new ambitious projects. This cautious orientation can slow down the rhythm of technological progress in vital areas such as artificial intelligence, robot, augmented reality and green technology. This reflects negatively on the entire technological system and delays the arrival of innovations on the market.
A less varied market
The reduction of consumers derives from other expected results. If the costs become useless for foreign producers, some can completely retire from the American market, in particular small brands with narrow margins. With this, the consumer loses the diversity of prices and characteristics to the projects and the market becomes dominant with some important signs. This lack of competition can reduce the incentive for the main companies to provide innovations or reduce prices and puts the consumer in front of limited options that do not necessarily express his needs or desires.
A possible global escalation
Customs duties do not stop their effects on the boundaries of a country, but they can turn on a series of vice measures by other countries. China and some countries of the European Union have expressed its will to respond similarly to any new American commission, threatening to highlight complete commercial wars. In addition, the damage will not be limited to electronics, but it can include other sectors such as cars, food and clothes, even medicines. What the American consumer puts in the face of an increase in high level of living costs.
Tests and economic pressure
Economists warn that commissions can contribute to the high inflation, weakening the citizen’s purchasing power and threatening the stability of the economy. These pressures can force the Federal Reserve of the United States to increase interest rates, which makes more expensive loans, accommodation and funding and negatively affects economic growth. Therefore, the policies that should protect the local economy can lead to adverse results that influence the daily life of the citizen. There are those who see these customs duties only a pressure card to remodel the global supply chains and reduce dependence on specific countries. But there are those who fear that it can lead to a disorder widespread in the markets and ignore the reality of global economic bond.
What is certain is that the results of these policies will extend to each user of technology, from the phone we carry, to the computer we are working on. And with every decision taken on the political table, there is an interested “end”, whether he feels it immediately or then.
