Summary
Best Buy warned that Trump’s proposed tariffs on imports from China, Mexico, and Canada could raise prices on consumer electronics, as 60% of Best Buy’s inventory comes from China.
Trump plans to impose a baseline 10% tariff on all imports and a 60% tariff on Chinese goods to boost domestic manufacturing.
Retailers like Best Buy and industry groups like the Consumer Technology Association are preparing for supply chain disruptions by importing goods early or sourcing alternatives to avoid higher consumer prices.
They absolutely will.
Either directly, because those goods are now more expensive to Best Buy and they’re not about to eat that, so it’ll get pissed directly on to the consumer (with a mark-up)…
…or indirectly, when any one or more of the corporate entities involved in the domestic supply chain sees that domestic goods are now cheaper than imports for the consumer, which means that they now have an opportunity to simply raise their prices to match and pocket the difference.
Nevermind that domestic supply chains often have roots in China anyway, so it’s not like the domestic electronics are going to be able to hold price either, since their imported components will still be getting hit with the tariff.
My favorite part of this aspect of it in particular is that while electronics are no doubt ubiquitous, most electronics purchases are more discretionary. It’s not like a car where if yours dies you are definitely buying another one. Most times, people are getting a phone because a new model came out, or they decided theirs was too slow. They’re getting a new TV because they want to upgrade or found a good deal.
So when these tariffs hit and prices lurch up, expect sales to plummet as people decide they can keep going with their current electronics just a bit longer.
So congratulations, domestic beneficiaries of an electronics tariff, any profit increase you might have gained will now be more than gutted by the nosedive in overall sales!