In turn, some shoppers are worried that tariffs would lead to a major price increase on Apple's latest tech. — Reuters
From iPhones and MacBooks to kitchen appliances, groceries, and even cars, some consumers are debating if they should expedite making big purchases ahead of President-elect Donald Trump's promise to implement tariffs on goods made outside the United States.
Across social media, consumers are trading notes on big-ticket items and if they could skyrocket in price. On Reddit, one couple who just closed on their first home is considering upgrading their washing machine and dryer. A therapist on Facebook is looking at buying a MacBook Air before it sees a hypothetical price hike. Another woman is car hunting.
But is it necessary? And how much could Trump's proposed tariffs impact day-to-day costs?
Here's what we know.
What are tariffs?
Tariffs are taxes imposed on imports from other countries outside the United States. The company purchasing goods or parts from the other country will pay a fee. Sometimes, this fee gets baked into an increased final cost for consumers.
Experts at the Tax Foundation – a nonpartisan tax policy nonprofit – say tariffs have both pros and cons. On one hand, they can increase demand for domestic production. Conversely, higher trade barriers can raise consumer prices and negatively impact economic output.
What has Trump said about tariffs so far?
On the campaign trail, Trump promised to implement tariffs of 10 to 20% on all goods. He said imports from Mexico would see tariffs of at least 25% if the country doesn't cooperate with his plans to mitigate US immigration. Mexico is the United States' top trading partner.
Trump also suggested a 60% tariff on Chinese goods, which could significantly impact US imports from China, especially smartphones.
According to the Census Bureau, the United States imported about US$4 trillion (RM17.88 trillion) in goods and services in the past year. Of that, US$433bil (RM1.95 trillion) was Chinese goods and about a tenth of those imports were smartphones. With no substantial US production of smartphones, over 80% of smartphone imports come from China.
The Tax Foundation said if Trump's tariffs were implemented as promised, average tariff rates would be at Great Depression-level highs.
How is the United States operating with tariffs right now?
During Trump's first term, he imposed a tariff on one-tenth of US imports, limited to products including steel, Chinese goods, washing machines, and solar panels.
President Joe Biden kept those tariffs in place and increased tariffs on solar panels, Chinese electric vehicles, and other targeted items.
The National Retail Federation found in a study that Trump's proposed tariffs could decrease Americans' spending power by up to US$78bil (RM348.7bil) annually because costs retailers absorb will trickle down to the prices consumers see.
What could tariffs mean for iPhones?
Apple's iPhones make up a large portion of China's smartphone imports to the United States. According to US smartphone market share data, the iPhone's US mobile market share is 57% this year.
In turn, some shoppers are worried that tariffs would lead to a major price increase on Apple's latest tech.
Calculating the tax is complicated, but economists estimate an iPhone could cost about US$300 (RM1,341) more in taxes based on Trump's suggested tariffs and the current price of the iPhone 16 (starting at US$799/RM3,999 locally). And a portion of that higher tax would likely show up in the final price tag consumers see. It's worth noting that Apple products were not impacted by the first Trump administration's tariffs. At the time, the company got exemptions from tariffs on Chinese imports. Still, experts say either way, Apple stock is still likely to take a hit.
What have companies said about tariffs and their impact on prices?
Leaders of several companies say tariffs would hurt American buyers' wallets, not foreign countries' bottom lines.
AutoZone CEO Philip Daniele said in September that if Trump implemented additional tariffs, those costs would be passed on to consumers.
Columbia Sportswear's CEO, Tim Boyle, told the Washington Post that the company was "set to raise prices" in response to new tariffs.
"Trade wars are not good and not easy to win," Boyle said last month.
Donald Allan, CEO of Stanley Black & Decker, also told analysts that "there would be price increases associated with tariffs." Allan added that the company would consider moving production out of China to reduce the tariff's impact.
"We don't like tariffs because they are a tax on the American people," Tarang Amin, CEO of ELF Beauty, told Business Insider. The makeup company has been impacted by a 25% tariff since 2019 thanks to Trump's first term. Amin said the company was waiting for more information about potential additional tariffs before changing its pricing structure.
Big companies aside, small-business owners that sell or buy products using imported materials would likely be impacted the most.
What do experts say about 'panic buying' ahead of tariffs?
Experts say it's important to weigh options practically, but not fall victim to panic buying impulses.
"Even on big-ticket items like cars and computers, it's nearly impossible to predict how prices will be affected," said Howard Dvorkin, CPA and chairman of Debt.com. "In our global economy, almost everything with moving parts has components sourced from multiple countries. Cars and computers aren't like cookies and crackers – they don't come with a list of ingredients. Good luck trying to figure out how those overseas components will raise the overall price of that laptop you want."
Odysseas Papadimitriou, CEO of the personal finance website WalletHub, told the San Francisco Chronicle that it wouldn't be a bad idea to replace something like a fridge or car slightly earlier than planned if it was already a goal within the next six months or so, but that it doesn't make sense to replace tech that's working just fine.
"Talking about necessities, if people can afford it without getting into debt, I think that is a good idea," Papadimitriou said.
Many business leaders also believe Trump's tariffs are a component in a negotiation strategy and that it's unlikely he'll impose uniform tariffs across the board. There may be exceptions for smartphones and other tech, for instance.
"I'm a businessman who knows the value of hardball negotiations," Dvorkin said. "It's quite possible that's what Trump is doing here: threatening tariffs to get the trade deals he wants."
And regardless, Dvorkin added, there's still time to plan big purchases.
"Donald Trump won't be sworn in until Jan 20," he said. "There's plenty of time to make calm, rational purchasing decisions." – The Philadelphia Inquirer/Tribune News Service
