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Looming Hardware Tariffs Affect Technology Costs

Looming Hardware Tariffs Affect Technology Costs

As if the end of the year doesn’t present enough challenges for IT professionals and businesses. They can add another.

The United States’ ongoing trade conflict with China continues to affect purchases of business computers, hardware and technology equipment. And, that will endure for the near future, straining, and even busting, your business’s budget.

What’s the reason behind the tariffs? Simply, or not, it’s to balance out our $375 million trade deficit with China.

Beginning in July 2018, the U.S. Trade Representative (USTR) imposed a tariff on more than $200 billion worth of Chinese imports. The first stage of the increase took effect on September 24. At that time, a 10 percent duty was levied on incoming goods from China. The tariff was expected to increase to 25 percent by January 2019. However, recent negotiations have pushed the expected increase to the second quarter of 2019. This extension gives buyers a little more time to get ahead of any technology equipment price hikes. That means some room to breathe for businesses.

For the technology industry, the tariffs affect everything from magnetic disk storage units and semiconductors to circuit boards and flat panel display parts. For those businesses relying on technology to operate, major manufacturers, which heavily rely on their supply from China, are most at risk.

According to a report prepared for the U.S.-China Economic and Security Review Commission, a look at seven major IT manufacturers, including Hewlett-Packard, IBM, Dell, Cisco, Unisys, Microsoft and Intel, showed on average 51 percent of shipments to them originate from China.

As a result, businesses shopping for new tech can count on paying higher prices. Many major manufacturers are already passing on price increases. They plan to do so again in 2019, when tariffs make that jump to 25 percent.

Business technology buyers must act quickly. By partnering with their managed IT services providers, they can lock down pricing today on near-term purchases. They can also decide whether to pull forward expected purchases that were budgeted for 2019. This way, they can beat the 15 percent tariff bump and inevitable increased costs.

A well-thought-out plan of action for purchasing necessary business tech equipment now can help offset these increases later. And, it ensures IT dollars are effectively spent.

Get in touch with Vology. You can learn more from us about getting the most out of your IT budget today.