The US-China trade war: does this mean more expensive TVs and phones?

What do many televisions, batteries, computer monitors and printer ink cartridges have in common? They are made in China, of course.

They could also cost about a quarter more if the trade war discussed between the US. UU And China becomes a reality.

However, discover what is happening, and why, and open a Pandora's box that reveals how much it is not just about trade, but about the domination of future technology such as AI, autonomous cars and 5G.

The Trump administration does not believe that China adequately protects intellectual property or that it sufficiently opens its markets to US companies.

It also has a massive trade deficit with China, and Americans import a lot more products from China than it exports.

That is why he proposes to put tariffs of 25 percent on imports of televisions and more than a thousand categories of products from China, ostensibly to help create a level playing field.

These tariffs amount to approximately US $ 150 billion in total. The problem is that the cost could end up simply going directly to anyone in the US. UU Who wants to buy electronic products made in China.

Chinese-made TVs may be about to go up in price for buyers in the US UU Credit: Jamie Carter

(Image: © Jamie Carter)

How expensive could they be?

Chinese manufacturing electronics could become 23% more expensive for US buyers UU., According to a report by the Consumer Technology Association (CTA), organized by the CES in Las Vegas every January, and the National Retail Federation (NRF).

A TV made in China that costs $ 250 today would cost $ 308 after the rates are applied, he says, while one that costs $ 500 today would cost $ 615. "These proposed rates are bad for the economy, US businesses and consumers, "says Gary Shapiro, CEO and president of CTA.

"For televisions, only one of the 1,300 products on the administration's list, the US pockets will suffer." The United States imported 23 million TV sets from China in 2017, according to Sigmaintell.

  Skyworth, TCL and Hisense together represent a fifth of televisions. Credit: Jamie Carter

Skyworth, TCL and Hisense together account for a fifth of television sets. : Jamie Carter

(Image: © Jamie Carter)

Does this mean that all TVs?

This 23% increase applies only to televisions imported from China. "The three major Chinese brands (TCL, Hisense and Skyworth) combined accounted for more than 20% of global shipments in 2017 and also produced many more sets for other brands," says James Manning Smith, research analyst at Futuresource Consulting .

China is currently experiencing a boom in TV manufacturing factories, and it seems inevitable that China will soon dominate television production.

"The likelihood that this policy proposal will become law is still in the balance, but the impact on consumers would be considerable," says Manning Smith, suggesting that the average price of a television in the US. UU It could go up from $ 450 to $ 500.

However, there are always gaps. "Companies like TCL, which has grown rapidly in the last 24 months in the US and is now competing closely with LG, has manufacturing facilities all over the world," says Manning Smith.

"It is likely that the production of games destined for the United States may be pivoted to countries not affected by the tariff." Both TCL and Hisense have assembly plants in Mexico.

  The Chinese telephone and telecommunications manufacturer ZTE has just obtained an "order of refusal".

Chinese device and telecommunications manufacturer ZTE has just obtained a "refusal order"

(Image: © ZTE)

Smart phones and cyber espionage

United States distrusts Chinese telecommunications equipment manufacturers, and the end result is that Americans can not buy a Huawei P20 Pro and soon, the ZTE Axon 7 . Why? National security.

"Cyber ​​espionage has been a recurring theme that has shaped American technology and Internet-related politics for some time," says Manning Smith.

That's why Huawei was abandoned by AT & T in January, and that's also why the Trump administration last week imposed an "order of refusal". in ZTE forbidding you to import American components. Now the United Kingdom is nervous .

"Since ZTE depends on components, IP and software from US companies, the restrictions effectively prevent ZTE from producing and selling more devices," says Manning Smith.

ZTE suggests that the decision, if implemented, could bankrupt it. "The refusal order will not only seriously affect the survival and development of ZTE, but will also cause damage to all ZTE partners, including a large number of US companies," a spokesman said.

Everything shows how dependent American and Chinese technology companies are in contact. ZTE may have been the third or fourth largest seller of smartphones in the US UU In 2017, and 60% of the world's smartphones are sold by Chinese companies, but without one thing from American companies, the business does not work. That thing is the microchip.

  The key to understanding the dispute are the microchips.

The key to understanding the dispute are the microchips.

Cheap as microchips

Leaving aside rates, the United States is mainly concerned with protecting its microchip business, which is considered fundamental for future technology markets.

Although China could be the global headquarters of electronics, it does not dominate the truly advanced technology, semiconductors, which produce processors and chips at the heart of all smartphones, tablets and devices.

China's high-tech sector depends heavily on chip manufacturers abroad. MediaTek and Taiwan Semiconductor of Taiwan and Samsung Semiconductors and Hynix of South Korea are major players, as are US companies Intel and Qualcomm (in March a Presidential Order prevented a proposed acquisition of Qualcomm by Broadcomm for reasons of national security).

With the future of AI, autonomous cars and the launch of 5G at stake, this is a politically sensitive industry.

Although Chinese companies do make chips, such as Huawei, RockChip and Foxconn, the industry is a work in progress that the country "Made in China 2025" is trying to address.

Its goal is to have 70% of microchips produced by Chinese companies by the year 2025. And that means buying technology from around the world.

"Chinese companies want to create semiconductors inside China, instead of importing from the United States, but they know that the only way to do it in the coming years is to use intellectual property," says David Harold, Vice President of Communications, Imagination Technologies whose technology allows the creation of chips.

He says that around 25-30% of new Imagination licenses come from China at the moment, but that American semiconductors are not irreplaceable in assembled systems in China.

"In the short term, there are many semiconductors available for television and mobile devices in Taiwan, or automotive in Japan and Israel," he says.

  Qualcomm manufactures Snapdragon chips in premium Android phones

Qualcomm makes Snapdragon chips in premium Android phones

Is the history of the global technology market?

"In the long term, I think the expansion of the Chinese chip industry is likely to be good for global electronics consumers," says Harold. "Although not necessarily in the US."

Although calculated to punish China, banning Huawei and ZTE could force them to move more quickly in their chip-making businesses.

However, Dr. Joe Zammit-Lucia of think tank Radix and coauthor of Backlash: Saving Globalization from Itself is not convinced that a decrease in supply chains worldwide increase the prices of technological products. "Prices are determined mainly by what people are willing to pay, not by the cost of manufacturing," he says.

Others think that the total complexity of the global technology industry makes it difficult to predict the consequences of a single policy.

"These companies and technologies are so intertwined internationally that it is difficult to separate the layers and understand the potential impact on the global market," says Manning Smith.

"It is true that if a 25% trade tax were applied between China and the United States, there would be a global announcement.The effect on the cost of consumer electronics"

The technology industry is globalized and probably keep it that way, but one thing is for sure: no commercial dispute has been so fascinating since the opening sequence of . Phantom Menace .