Earlier this week, the Trump administration delayed implementing a planned 10% tariff on certain goods made in China. So far, companies haven’t communicated how they’ll respond to the tariffs, including whether they’ll pass on the additional costs on to consumers. And as consumers head into back-to-school shopping—followed by the holiday shopping season—the trade war maneuvering has created a degree of uncertainty so high that not even experts can agree on what will happen next.
But two things are certain: Starting on Sept. 1, products like wireless networking devices, lithium-ion batteries, and Mac computers will be hit with the tariff. Then on Dec. 15, other Chinese-imported goods, including smartphones and wired headphones, will follow suit. As for what gets surcharged when, the lists are dizzying and seemingly random but worth reviewing, especially if you’re planning on making a tech purchase in the coming months.
So the question is, when should shoppers make their next big tech buys? After all, conventional wisdom would suggest a 10% corporate cost hike would increase prices by the same amount—though that might not be the case in every situation.
Tim Bajarin, an analyst with Creative Strategies, says that most companies could try to reduce the impact on shoppers as much as possible to save face and maintain consumer loyalty. But he warns that even a small price hike on some products seems likely.
“At the moment, we don’t know exactly how they will price their products if impacted by the tariffs,” Bajarin says.
Bajarin’s uncertainty is echoed by 556 Ventures analyst William Ho, who cautions that trying to handicap pricing in light of the tariffs is a fool’s errand.
“This is a moving target of which there is a lot of moving parts that are unknown in the supply chain,” he tells Coins2Day.
It’s also important to note that the tariffs will apply to goods shipped from China to the U.S. On or after Sept. 1 in the first tranche and Dec. 15 in the second. Shipments that land before those deadlines (including inventory already on the shelves) won’t be subject to the tariffs. As a result, looking ahead to the holiday shopping season, certain products may see no price hikes, whatsoever.
“Some [products] have shipped and others, like shoes [and] clothes for the holiday, are most likely on boats now,” Bajarin says. But he cautions that computers, game consoles, and other popular electronics that will be on sale this holiday season won’t make their way to the U.S. Until September or October, making them subject to the tariffs.
But there is one guaranteed way to beat the tariffs: Buy your goods now.
“We believe pre-Labor Day would be the time to get ahead of the Sept. 1 deadline,” Wedbush analyst Dan Ives says. “[Consumers who are] holiday shopping should try to get done before Dec. 15th.”
Ives predicts prices will soon rise on products, including wireless routers and smart home devices like the Amazon Echo, that are subject to the September tariffs. Those impacted in December, including smartphones and Roku boxes, will probably remain at their current prices until later in 2019.
Still, making holiday purchases in late August or early September might be a tough sell for shoppers. One reason is that a lot of 2019’s must-have holiday products aren’t yet for sale. (This is why you should wait until September to buy an iPhone, for example.)
Ho thinks the trade war’s impact on consumers will be “educational and psychological,” suggesting they will first need to understand how they’ll be affected by the tariffs, before they actually do anything to save money.
“If the price hikes aren’t well communicated, the bulk of the mainstream buyer may not care,” he says. “Or worse—(they may) put that purchase off until the following year.”
Ho says the buying psychology that’s been drilled into the American consumer is to wait for Black Friday deals and Christmas sales. As a result, this idea of shopping sooner to beat the tariffs is hard to fathom.
And not only that, it may also be jarring for consumers. “It’s like being on a rollercoaster at an amusement park, with Washington, D.C. And Beijing at the controls,” Ives says. “The only difference is, no one is smiling.”
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