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Trump backs off tech tariffs as threat to consumer wallet gets real

Trump 5G speech

There is seemingly only one thing which is more important to President Donald Trump than winning the trade-war, and that’s getting re-elected to the White House for a second term.

The latest message from the White House is a simple one; technology companies will largely avoid the threatened tariffs because it might punish the consumer financially. The fourth quarter is fast approaching, a period which is usually very profitable for the consumer technology giants due to Christmas purchases, the political fallout could be quite damaging.

Announced by the Office of the US Trade Representative, certain products will be exempt from trade tariffs to be introduced on September 1. These products include smartphones, laptops, gaming consoles, some toys, computer monitors, and various items of footwear and clothing. The tariffs will instead be introduced on December 15, once the store shelves have been stocked and many consumers would have completed their Christmas shopping.

“We’re doing this for Christmas season,” Trump said to US reporters. “Just in case some of the tariffs would have an impact on US customers which so far they have virtually none. The only impact is that we’ve collected over $60 billion from China.

“Just in chance it would have an impact on people, we’re delaying the tariffs, so they won’t be relevant to the Christmas season.”

This might be a short-term win for the consumer, but let’s not forget, the tariffs will be introduced eventually. Consumer goods will increase in price, as there are few firms who are patriotic. Manufacturing facilities would not be on the other side of the world if they were, they would create jobs and facilities in the US. There is a financial benefit to manufacturing products elsewhere or purchasing components from China.

Trump has stated there have been no impact to the consumer to date, but there will be. Anyone who believes the consumer will be protected from the additional cost acquired through these tariffs is either naïve or stupid.

There have of course been numerous technology companies lobbying for exemption from the tariffs however this reprieve is much more expansive. Share prices have increased by 4.5% for Apple following the quip from Trump, however toy manufacturer Mattel saw a 4.6% gain, while shoe designer Steve Madden saw a 3.4% boost.

For the moment, this is a good thing for the consumer, however it will likely only be temporary. Trump has escalated and de-escalated the trade-war with China where it suits his ambitions, and this smells like another tactical withdrawal. The aggression has been anything but consistent, with some ego stroking thrown in and the promise of a progressive phone call never too far away. This is usually followed up by a significant announcement or claim from one of the hawkish politicians.

The see-sawing might well be a ploy by the White House to destabilise trade-talks, perhaps an attempt to manoeuvre into a more advantageous position. This might well be the case here, though there is perhaps an eye being cast to the next Presidential Election.

There is now 446 days left until the next Presidential Election and the campaigning will start to ramp up in the new year. As the Democrats already have plenty of ammunition to hurl towards the Oval Office, the last thing Trump needs is fresh wounds from an overly expensive Christmas shopping list to be lurking in the already financially straining January.

This looks to a momentary reprieve in the trade-conflict which has dominated headlines in the technology world for 2019. As it stands, the tariffs will be introduced, but at least US consumers can get their hands on the latest Apple flagship device first.


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