Expensive – Earlybirds Invest

Less than six months ago, after an inappropriate amount of research, I bought a new toaster for $30. My old toaster had died, as old toasters do, and I wanted to buy one cheap enough that I wouldn’t be mad when I had to replace it. If President Donald Trump’s current 145 percent tariff on Chinese imports remains in effect, the same toaster could cost me about $45 when that time comes.

You’ve probably seen a lot of these Trump tariff calculations for consumer products lately — especially those for goods made in China, from iPhones to baby products. In many instances, it’s hard to even guess how much things will cost because the tariff structure has become so complicated and is constantly changing.

Tariffs on consumer technology products are particularly tricky. China supplies the vast majority of electronics to the United States. In fact, smartphones and laptops alone accounted for over 16 percent of all US imports from China. That’s part of the reason the Trump administration recently added exemptions for a number of electronics, including smartphones and laptops, which were also exempt from the tariffs imposed by the first Trump administration. But this week, Trump clarified that those products could face an entirely new tariff targeting products with semiconductors on national security grounds. The fate of other electronics, like toasters, is even more unclear.

“Assuming all goes in the direction this is headed, it may cause shortages, and likely price hikes on some goods,” said Ben Bajarin, CEO and principal analyst at Creative Strategies. “But all of that is very difficult to know right now.”

That means we currently have no idea what will happen to our gadgets. Higher prices for some items seem inevitable and that might actually be the best case scenario for some electronics. Smartphone manufacturing has been expanding beyond China’s borders for years. (Apple actually airlifted 600 tons of iPhones from factories in India to get ahead of tariffs.) Some lower-priced goods might simply stop getting shipped to the US, if factory owners decide it’s not worth the effort. And certain things aren’t made anywhere else.

Exactly 100 percent of US imports for some very common household items — including hair curlers, ultrasonic humidifiers, alarm clocks, and yes, electric toasters — come from China, according to data from the US Census Bureau. Over 90 percent of imports of microwave ovens, LED bulbs, keyboards, electric fans, battery-powered massagers, vapes, and baby strollers come from China. You can find a full list of imports that shows how reliant we are on China in this spreadsheet with data compiled by Jason Miller, interim chair of the supply chain management program at Michigan State University.

Meanwhile, it’s hard to imagine some American factory owner is getting excited about firing up a new toaster factory, in part, because all the parts needed to make those toasters also come from China.

“The entire ecosystem exists in China to support the assembly of these products,” Miller told me. That ecosystem includes everyone from the company that produces tiny screws to the factory that makes the plastic pieces to the firm that makes the molds. “It would take years to replicate that anywhere else in the world.”

It’s hard to imagine some American factory owner is getting excited about firing up a new toaster factory, in part, because all the parts needed to make those toasters also come from China.

And certainly not in the US. “Knowing the incredibly sharp drop of small electric appliance production we have experienced in the United States over the past 35 or 40 years, there’s just no simple way to bring products like this back,” Miller added.

There is some hope, albeit misguided, that smartphone production can happen in the US. Commerce Secretary Howard Lutnick has pushed the fantasy of an American-made iPhone, recently saying that an “army of millions and millions of human beings screwing in little screws to make iPhones…is going to come to America.” There’s overwhelming evidence that the US couldn’t manufacture these things even if it wanted to. Many of the parts needed to build smartphones and laptops come almost exclusively from China and other countries in Asia that now face steep tariffs.

Again, we don’t know what will happen in the weeks and months to come. But based on what we learned in the pandemic, shortages and inflation seem likely.

The flip side of that is that the secondary market is bracing for a big boost in demand. Places like Back Market and Gazelle, as well as big retailers like Amazon, Walmart, eBay, and Best Buy have seen the market for refurbished products explode in recent years, as inflation and fewer new must-have features have kept people from upgrading to the latest generation of phones and laptops.

You can even expect carriers to ratchet up their trade-in programs since they’re major players in the secondary market now, too. If you trade in your old phone for a discount on a new one, the carrier can make money selling that phone to a refurbisher, which is good for the customer, the carrier, and the planet.

The catch with these secondhand devices, though, is that a lot of the refurbishing happens overseas, including in China. It’s not clear what the tariffs on those transactions would be, but it might not matter. While we can’t build iPhones in the US very easily, we’re already refurbishing them stateside, and there’s a good chance we can expand those operations.

“We have to do some of this work here, and the labor is there, the facilities are there,” said Sean Cleland, vice president of mobility at the marketplace B-Stock Solutions. “I think that’s an easy transition. What’s tricky is the parts.”

The vast majority of the components that go into iPhones, other smartphones, tablets, and laptops come from China and will face tariffs. Labor is also more expensive in the US than China so the cost of actually doing the work might go up as well. So it’s possible that, because of indirect effects of the tariffs, refurbished gadgets also get more expensive. Nevertheless, Cleland assured me that even when the prices of new devices have gone up in the past, prices on the secondary market have remained stable.

Prices for products without bustling secondary markets are already rising on everything from coffee machines to sex toys. Those prices won’t necessarily come back down if the tariffs ever go away. Cleland told me he expects modest price increases, “20 percent or less,” will stick if manufacturers don’t see declining sales.

The shortage situation is a bit scarier — and not just for the toaster market. This week, the Trump administration also opened an investigation into pharmaceuticals manufacturing in China, raising fears that new tariffs could lead to drug shortages. Meanwhile, as people struggle with tariff uncertainty, they’re already panic buying everything from clothes to umbrellas. Because 80 percent of toys are made in China, leaders in the industry are already warning of imminent shortages and that “Christmas is at risk.”

For those products that are 90 or 100 percent imported from China, you can also expect to see fewer options available as companies streamline their operations in order to save money. There’s a good chance they only carry the bestselling items. That means if you know you need something new, buy it now, but if you can wait a year or two, there’s a chance things will settle down.

“The more uncertainty there is, the more there’s value in waiting,” said Miller, the Michigan State supply chain expert.

That’s how I’m feeling about the phone question. I had been planning on upgrading my iPhone later this year, but I’ll probably just replace the battery so it feels new again. At that point, it will probably be time to buy another new toaster and I will be absolutely devastated if the Pioneer Woman digital two-slicer with the folksy flower design is no longer available.

A version of this story was also published in the User Friendly newsletter. Sign up here so you don’t miss the next one!

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