American electronics companies are feeling the weight of President Trump’s trade tariffs and have begun laying off employees in some cases, according to an industry survey.
About 13 percent of companies with U.S. operations said they have slowed down hiring or laid off workers due to the Trump administration’s Chinese tariffs, according to a survey from the IPC, a global trade association for the electronics industry.
The electronics industry depends heavily on Chinese manufacturers, and 90 percent of companies said they were concerned about the deleterious effects the new tariffs will have on their profit margins.
A large majority of the companies, 69 percent, reported lower profit margins due to tariffs, and 21 percent said they will be cutting back their investments in the U.S. as a result. Additionally, companies said on average that they have seen the effects of the tariffs on 31 percent of the total dollar value of their imported products.
“Rising tariffs are putting a painful squeeze on many U.S. electronics manufacturers,” said IPC’s head economist, Shawn DuBravac. “It seems clear that loss of profitability is impacting the ability of these companies to invest in the U.S.”
“Our industry has longstanding concerns about some of China’s industrial policies, including government subsidies and intellectual property violations,” the trade association’s president and CEO John Mitchell added. “But addressing unfair trade practices by ratcheting up tariffs is like using a sledgehammer to make orange juice. In both cases, it’s the wrong tool and makes a mess of the job.”
The IPC called on the Trump administration to roll back the tariffs and focus on negotiating a trade deal instead.
The tariffs have cost the electronics industry over $10 billion since July of last year.
The administration in August delayed a planned 10 percent tariff on $300 billion of Chinese imports in hopes negotiations could be resumed. previously, in May, Washington upped tariffs from 10 percent to 25 percent on $200 billion worth of Chinese imports, claiming Beijing had reneged on the previously agreed terms of a trade deal. The U.S. also has a 25 percent tariff on $50 billion worth of Chinese high-tech products.
In response, China has imposed 25 percent tariffs on tens of billions in U.S. goods.
The Trump administration has thus far extended $28 billion in subsidies to American farmers to blunt the effect of the trade war, more than twice as much as was spent to bail out Detroit automakers in 2009, according to Bloomberg.