Q&A – Do You Still Need to Buy Stuff to Avoid Tariffs? - Driven By Braman Motorcars
Each day I feature a listener question sent by one of these methods.
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Today’s Entry: @brianmuddradio Please explain what Trump’s new China tariff announcement means. IE should I still be buying a new iPhone to avoid tariffs?
Bottom Line: In short. No. Ditto a new TV, a new computer or just about anything that would go into the consumer electronics category. This is a great question for us to dig into because of the way the tariff game is played – and specifically the way that we may choose to react to it changed considerably over the weekend.
On Saturday President Trump announced the tariff news heard ‘round the world once again when he issued a tariff exemption from the now 145% tariffs imposed on imported Chinese goods. The headline news that came out of it was that smartphones and computers were exempted – however, the entire list was far more comprehensive with electronic devices and components, including semiconductors, solar cells, flat panel TV displays, flash drives, and memory cards gaining exemptions too.
With approximately 90% of consumer electronics purchased within the United States having a tie to China somewhere during the manufacturing process – there's no category of goods more impacted by tariff exemptions than this one. What’s more is that while President Trump announced the tariff exemption, he made it retroactive to imports starting April 5th – which was the beginning of last week.
What this means is that there will have been limited Chinese tariff impact on any consumer electronics purchased within the United States. So yeah – there's now not a need for a sense of urgency to go buy a new iPhone, iPad or TV due to concerns about the Chinese tariff war. But that’s not all. Lost in the fog of the tariff war are lots of product categories exempt from tariffs. Let’s break down that list and the reasons cited for the exemption:
- Pharmaceuticals: To ensure continued access to essential medicines and avoid disruptions in the healthcare sector.
- Semiconductors: To support the technology sector and prevent exacerbation of existing supply chain issues in critical industries such as electronics and computing.
- Lumber: To prevent additional costs in the construction industry and avoid inflating housing prices.
- Copper: Due to its critical role in various industries, including electronics and construction, and to avoid supply shortages.
- Gold: To maintain stability in the precious metals market and avoid impacting financial instruments tied to gold prices.
- Energy Products: To ensure energy security and avoid increasing costs for consumers and industries reliant on energy imports.
- Certain Critical Minerals: Not available in the U.S., exempted to support industries dependent on these imports and to avoid supply chain disruptions.
- USMCA-Compliant Goods: To honor existing trade agreements and maintain favorable trade relations with neighboring countries.
- Steel and Aluminum: Already covered by existing tariffs imposed in previous trade actions, thus not subject to additional tariffs under the new regime.
- Automobiles and Auto Parts: To avoid further disruption to the automotive industry and maintain stability in a sector already affected by previous trade measures.
Of course, it’s worth mentioning that this could change...and quickly as we’ve seen. With that said the bias recently has been towards more exemptions – not fewer, though trade negotiations might have a say as to what changes day to day over the next few weeks.