As of 1 October 2018, the United States government under the Trump administration has implemented trade tariffs on a lot of goods, with a planned 25% tariff hike by 2019. Immediately after the new tariffs came into effect, everything on this extremely extensive list got a 10% increase in import tariffs. In addition to the trade tariffs, there’s also an additional price increase in shipping costs for imported goods, ranging between 20-30% depending on the shipping method. So before you hit the jump, here’s the general idea – everything is about to get a moerse increase. And it affects us too.
To illustrate just how far-reaching these tariffs are, Digitimes recently reported that several companies which have manufacturing facilities in mainland China are seriously considering their options regarding moving manufacturing facilities to Taiwan. In monetary terms, the kinds of moves being considered range in the billions of dollars for the industry, and mean that new supply chains will have to be set up, employees will have to be relocated, salaries will have to increase because Taiwan is an expensive country to live in, and there will be general strain on Taiwan’s shipping and export industry because of the increased load on exports.
The first company to openly state their intention to move is Pegatron, who announced in August 2018 that they had already reestablished several factories in Taiwan and were moving production back onto the island. Taiwan is not affected by the tariff increases. Most of the tech industry is affected by this change because the majority of their manufacturing and assembly lines are in China, and the trade tariffs are retaliatory in nature as part of the ongoing US-China trade war.
The new tariffs cover computer components in general, including pre-built desktops, water-cooling components, memory chips and memory sticks, solid state drives, monitors, office and gaming chairs, peripherals of all kinds, keyboard and mouse combos (and mice, separately), web cams, logic boards – basically anything with a logic board in it. If it has silicon inside, it’ll get tariffed. By 2019, there’ll be more than a 25% tariff hike depending on other factors that may affect the price, and it will be consumers who have to pick up the tab for this one. For the North American market including Canada, this video by Gamers Nexus rifles through all the changes and possible outcomes quite thoroughly.
However, there’s a possible side effect here that may end up affecting non-US markets. The PC market in the US is very, very lucrative for manufacturers, and it’s one of the most engaged markets in the world when it comes to computer purchases. Companies like ASUS, MSI, Gigabyte, AMD, NVIDIA, Intel, and others might prefer to maintain this market at the expense of others which aren’t affected by the tariffs, and thus increase prices for regions like Europe, the EMEA, Australia, New Zealand, Russia, Japan, India, and South America.
The price hikes in these regions could, if implemented, offset the increases for US imports on the company’s books. This is, surprisingly, a good thing. The average selling price of a company’s product rates quite highly in terms of shareholder interest in a stock, so companies that trade on stock markets may choose this option to make themselves more attractive to investors despite shrinking revenues.
The precedent for this is, ironically, Intel’s own processors (which are also now tariffed). For the last few months, the prices for all of Intel’s processors in Europe have increased by more than 50%, whilst in the US prices from Amazon and Newegg have remained roughly the same as they did six months ago. Part of this may be because of the company’s stock shortages, but the US market is clearly prioritised¹ over others², and in the US pricing stability and stock availability has remained stable. AMD hasn’t taken the same route for their products globally, whilst NVIDIA’s just-launched GeForce RTX 2080 and 2080 Ti has noticeably increased prices in EMEA regions compared how they priced the outgoing GeForce 1000 series cards in various regions.
For South Africa, drastic price changes are not a new thing for us. Most everything imported into the country works on dollar pricing which changes week by week, so we’re affected on all three fronts: by our poorly performing currency, by our location (who decided that the bottom of Africa was a good idea anyway?), and by our just-dipped-into-recession economy. Although we do have warehouses for a lot of components, assembled machines, and other kit, we don’t typically store a lot of it. As inventories get depleted during the holidays, we are likely to see price increases as a result of these tariffs affecting companies based in the US who import their goods worldwide.
Are local PC gamers going to have to pick up consoles to play games affordably, again?