IPC: Trump Tariffs Could Raise Smartphone Costs Almost 50%
New tariffs from the Trump administration could increase the price of smartphones in the U.S. by as much as 48.8%, warned the IPC, which represents electronics manufacturers. “Reciprocal tariffs have far-reaching consequences beyond just higher prices on finished imported goods,” Shawn DuBravac, IPC's chief economist, said in an emailed statement Friday. “Trade is essential to supply chain resilience, innovation, and cost competitiveness.”
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DuBravac projected that the demand for electronics could slow significantly as a result of tariffs. “Price elasticity for electronics can vary from -8% to -1.5%, meaning a 1% increase in price generally leads to a 0.8% to 1.5% drop in quantity demanded,” he said. “If prices rise roughly 50%, demand will fall by 40% to 75%.”
New Street also warned about the effect of tariffs in a Friday note to investors. “Tariffs will push equipment costs higher," threatening capital expenditures and free cash flow, wrote analyst Jonathan Chaplin. “Carriers are likely to slow deployment to preserve the current trajectories of dividends and repurchases.”
Matt Stoller, research director at the American Economic Liberties Project, wrote Friday that the tariffs are “an attempt to address a big and obvious problem, which is America’s inability to make vital goods we need," but he warned that inconsistent execution could mean that the plan may not work. Investors “still think Trump will negotiate away” most of the tariffs. “His son, Eric Trump, said that’s the idea, though the White House is indicating it has no plans to negotiate. President Trump is all over the place, saying he’s willing to negotiate, then saying on Truth Social his plans will never change, and then one more time saying he’s negotiating with Vietnam on a deal.”