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With Trump tariffs on China, consumers likely to take a hit

USA TODAY logo USA TODAY 3/22/2018 Mike Snider

The next smartphone, tablet or laptop you buy could cost more because of President Trump's planned tariffs on goods imported from China.

Apple's iPhones and other smartphones, computers, washing machines and other goods could all have higher price tags.

And that, in turn, could lead to lower productivity and U.S. growth, which could also hit consumers' pocketbooks, experts say.

"Consumers will pay more, but the more important hit is there’s less consumption by business and organizations who use these technologies to become more productive," said Robert Atkinson, president of the Information Technology & Innovation Foundation. "Therefore, productivity grows more slowly, the economy grows less and wages grow less. Overall (gross domestic product) grows less."

More: Trump proposes tariffs on Chinese goods and claims unfair trade practices

A proposed 25% tariff on imported Chinese information and communication tech parts and products could slow the growth of U.S. output by $332 billion over the decade, the ITIF estimates. 

For the average consumer, it could mean $150 to $306 less in annual income by the tenth year, the ITIF estimates.

Trump on Thursday asked trade officials to create lists of imported Chinese goods that should be subjected to tariffs; those are due in 15 days. Chinese tech products and goods with Chinese information technology built-in are expected to be among tariff targets -- a strategy aimed to counteract China's trade advantages gained requiring U.S. businesses to share technology to gain access to its massive market and rampant theft of U.S. intellectual property.

"We have tremendous intellectual property theft going on ... (amounting to) hundreds of billions of dollars on a yearly basis," Trump said.

However, the president's willingness to seek guidance from U.S. industry groups is a "welcomed first step," said Gary Shapiro, president and CEO of the Consumer Technology Association, in a statement.

“Unfair trade practices must be addressed, but the solution is not to put a new tax on U.S. businesses and force consumers to pay dramatically more to access the technology products they need," Shapiro said. "Increased tariffs and trade wars risk the nearly 2.5 million American jobs associated with trade involving technology products. Such a move threatens U.S. economic growth and wipes out the benefits of our recent tax reform."

Related video: China tariffs could affect $60 billion in goods, Trump says (provided by Bloomberg)

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Should tariffs be levied on tech products and parts, most companies directly hit by increased prices could handle the changes, analysts say.

Amazon could find itself having to pay 1% or 2% more for products made in China to sell to its massive shopping audience, said Daniel Ives, chief strategy officer and head of technology research at GBH Insights. "I think that is something they could absorb and I don't expect that to be passed on to consumers."

However, China's response could involve new levies of its own and "if China did something more draconian, some of that might have to be passed through (to consumers)," Ives said.

Apple, which has its iPhones assembled in China, may be "the most exposed" company, but one-fourth of iPhone sales are in China so that should help insulate the tech giant, he said.

But consumers are not so insulated. If Apple decides to directly get iPhone buyers to pay for tariffs, the price tag could balloon. "Let’s just say I’m paying $800 for an iPhone and they put a 20% tariff on it, it’s now going to cost me $960 for my iPhone," Atkinson said.

The Telecommunications Industry Association agreed that even though China had engaged in unfair trade practices, tariffs on tech products may be short-sighted. “The proposed tariffs of 25% on information communications technology goods would make it more expensive to expand and upgrade American communication networks," said Cinnamon Rogers, TIA’s senior vice president of government affairs, in a statement. "Companies, governments and individuals would find it harder to access an essential productivity tool."

More: Trump ponders tariffs on China over intellectual property and technology thefts

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