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U.S. Electronics Manufacturers Express Concern Over Tariffs

By MetalMiner Market OverviewOct 24, 2019 05:10AM ET
www.investing.com/analysis/us-electronics-manufacturers-express-concern-over-tariffs-200477260
U.S. Electronics Manufacturers Express Concern Over Tariffs
By MetalMiner   |  Oct 24, 2019 05:10AM ET
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Numerous companies have expressed concern over the U.S.’s tariffs over the last year and change, in many cases citing the tariffs when referring to gloomy earnings forecasts or workforce reductions.

From beverage can makers to automobile manufacturers, numerous sectors have bemoaned the impact of the Trump administration’s tariffs on their bottom lines (whether it’s the Section 232 tariffs on steel and aluminum or the vast series of Section 301 tariffs on goods from China).

That tariff pain has also been felt by the electronics sector, according to recent survey results from the IPC.

In IPC’s recent research report titled “Tariff War Fallout: U.S. Electronics Manufacturers Worried About Higher Tariffs and Laboring to Mitigate Impacts,” 86% of manufacturers surveyed between Sept. 25 and Oct. 2 were concerned about tariffs.

“On average, companies report they have seen tariff increases on approximately 31 percent of the total dollar value of the products they import,” the IPC report said. “Twenty-five percent of companies report over half of the dollar value of the products they import are facing higher tariffs.”

Some respondents indicated the tariff climate had an impact on their decisions regarding investment. According to the IPC, 21% of survey respondents indicated they are reducing their investments in the U.S.

In addition, 30% reported sales were down as a result of the tariffs.

“Some companies may choose to absorb the higher costs associated with tariffs to maintain sales levels,” the report states. “But this approach results in higher costs, which will inevitably hurt margins. Moreover, some companies report that even raising prices is not stopping margin compression and weaker sales.”

In terms of supply chains, the tariffs have also prompted a shift out of China.

“Some 51 percent of responding companies report they are sourcing from countries outside of China as a result of increased tariffs on Chinese imports,” the report notes. “Nearly one in five companies (19%) report they are moving manufacturing and potentially other business interests outside of China.”

by Fouad Egbaria

U.S. Electronics Manufacturers Express Concern Over Tariffs
 

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U.S. Electronics Manufacturers Express Concern Over Tariffs

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