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The PS5 Pro is an expensive machine at $699. Imagine a world where it costs $1,100. Those kinds of prices on consumer electronics may soon be a reality thanks to incoming President Donald Trump and his proposed tariff plans.
Trump will soon be president and believe that rate “It’s the most beautiful word in the dictionary.” As one of his first official acts, Trump is expected to impose tariffs on imports to the United States and a massive tariff on goods from China. Most of the electronics that America consumes are made in China. When a rate happens, the price of everything gamers love will increase. And more than we previously thought.
The Consumer Technology Association took time out of its busy week running CES to publish the new report about Trump’s tariffs and what effect he thinks they will have on the price of electronics. It’s a dismal study in the worst-case scenario, but it’s also based on the policy proposals floating around DC right now.
The CTA’s new report delves into what Trump is expected to do and how it could change the electronics market. There are two proposals floating around DC right now. The first is a general tariff ring of 10% percent and an additional flat rate of 60% on all imports from China, what the CTA calls the “10% / 70% Scenario”. The second is harder. The ring would be 20% on all imports and an additional 100% on anything from China. This terrible world is the “20% / 120% Scenario”.
The goal is to punish China and incentivize companies to move manufacturing to the United States to avoid heavy tariff costs. In reality, companies pass the costs on to the consumer. Manufacturing and supply chains are complicated. Everything needed to produce a PS5 Pro cannot be built overnight. It will take decades of construction and change for companies to move their manufacturing out of China. Meanwhile, Americans will pay the costs to offset the heavy tariff prices.
There are early reports that companies such as Microsoft, HP and Dell are accumulate electronic components and pushing manufacturing out of China in anticipation of the Trump presidency. NVIDIA and AMD, which have just announced new GPUs, are rushing to ship as many as possible to the United States. before Trump takes office on January 20. The RTX 5090 is already a $2,000 graphics card. This price could increase as much 40% percentup to $2,500, if some of Trump’s proposed tariffs take hold.
“The proposals would increase the average US tariff on imports from all countries, excluding China, from about 1% to 21%, and on imports from China from 11% to 131%, assuming the current levels and trading patterns,” the CTA report. he said.
The report goes through a list of major consumer electronics items, including laptops, gaming consoles, headphones and smartphones, and runs the numbers on what the two different scenarios would do to prices. “The proposed tariffs on these ten products alone would reduce the spending power of American consumers by $90 billion to $143 billion annually,” the report said.
Laptops and video game consoles will be the hardest because China is the major supplier for both and there aren’t many alternatives. “For example, in 2023, China will account for 87% of US video game console imports, 78% of US smartphone imports, 79% of laptop imports and US tablets, and two-thirds of US monitor imports,” the report said.
During his previous administration, tech lobbyists convinced Trump to give him an exemption on tariffs on electronics. It is difficult to know if they will be able to do the same thing this time, but the news that AMD and NVIDIA are accumulating GPUs, and the fact that the big technological companies have already changed the manufacturing abroad is a portent grim.
For the CTA, this is all a game of the US government to increase its revenue. One that will cost consumers a lot of time. “At their heart, these proposals are tools for the United States government to capture as much tax revenue as possible from the American people. We’ve seen this movie before and know the ending. The proposed tariffs will not create more jobs or manufacturing in the United States In fact, the opposite can happen where our productivity decreases and jobs can be lost over time when workers and companies have less accessible access to technology”, Gary Shapiro, CEO of CTA. , and Ed Bryztwa, VP of international trade at the CTA, said in the report.
Trump spent a lot of taxpayer money during his presidency and grew the national debt by $8 trillion. He also cut taxes on high-income earners. The tough fees, which will hit gamers hard, will be a way for his presidency to raise revenue for itself without passing tougher tax laws.
