What happens if the trade war hits the tech industry?
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Meaning nearly everything we buy from China would face a tariff that's left, some tech companies scrambling to try and shift their supply chains away from China. Others are lobbying to try and prevent the tariffs. But all face a similar question. Whether to pass the extra cost of tariffs along to consumers. Let's talk more about this in quality assurance, a segment where we take a deeper look at big tech story. See, we covers tech for the Wall Street Journal from Beijing. We talked about how tariffs will affect various consumer technology with sick. The iphone, for instance, a lot of phone parts come from China. There were some reports from J P, Morgan that said that if these terrorists take place than it would could raise the cost of an iphone of an iphone by v. Fifteen twenty percent and unclear whether apple had pass those costs and consumers but we're talking about one hundred fifty dollars increase in the price of the iphone ten if that happens so you mentioned, I phones already are there other products that we should be looking for in terms of the impact of these tears. There's a lot of component so anything that requires a computer chip might be affected. A lot of computer chips, and other components are, are manufactured out here and there's also some indirect costs that could rise because of these tariffs to for instance, stuff that an internet provider like Comcast wireless provider like AT and T buys, they need cell phone tower quit -ment. They need internet routers, and that stuff is facing tariffs to so while AT and T would be, for instance, paying those tariffs. They might raise the cost of your wireless plant because they have to pay more for that equipment. Right. And that's the choice companies face right now as their costs rise, you detectives, they have to decide whether to absorb those costs or how much they might pass on to consumers. Are we hearing anything from companies? To what they're planning to do. Cisco for instance already face a ten percent tariffs since last year. And they said, okay, ten percent we can absorb that. But once they went up to twenty five percent last year. They said we had to raise prices for some of our equipment. We just can't absorb a twenty five percent increase. A lot of people can take ten, they can't do twenty five and companies can also try and avoid the tariffs by shuffling their supply chains to bypass China altogether. What are we hearing from tech companies about their ability to do that? Yeah. Love companies have said they've already taken steps to move production to their other factories outside China. Cisco's done at Ericsson which also makes cell phone tower equipment. They've done that too, but not every company can do that. And there's some logistics involved for instance, if you wanted to move production from China to Vietnam, maybe you already have a factory there. But do you have enough workers to work at that factory? It's not easy to snap your fingers and say, we'll just move it to another country. It's going to be difficult rate, and even if they could there's going to be cost associated with that there's going to be cost. And you might not be able to manufacture a product as quickly or as well, as you did the foreign China, St. we with the Wall Street Journal next week, President Trump and Chinese president Xi Jinping will meet on the sidelines of the g twenty in Japan. Both countries are hoping to make progress after negotiations stalled last month. And now for some related links, US Trade Representative Robert lighthizer testified before Senate, and house committees this week and defended Trump's use of tariffs on Chinese goods, quote, if there's a better idea than tariffs. I'd like to hear it. He told the Senate finance committee, also fortune took a look at why analysts expect iphone production to largely remain in China, despite an offer from Foxconn which assembles the phones to move production to its facilities outside China. I'm Tracey Samuelson. And that's marketplace tech. This is a PM. This is Molly would host of marketplace tech the podcast, where you can hear conversations like legendary Sifi, author, William Gibson, talk about the problems created by the uneven distribution of wealth and technology, helping you think differently about the world you live in every weekday. That's marketplace tech on apple podcasts or wherever you like to download.