Trump spares smartphones, computers, other electronics from his 125% China tariffs
0
A toy store manager is hit with daily price increase notifications. A lip balm manufacturer forecasts a $5 million jump in cost of goods. A concert venue impresario saw a surprise price hike of $140,000 to install new seats in a performance hall.
They are among a dozen business owners and managers who spoke with Reuters about the impacts of President Donald Trump's tariff regime, providing an early idea of what many more Americans might expect, even as taxes on imports - paid by U.S. companies and often passed on to consumers - were partially paused for 90 days this week.
The businesspeople expressed concern about continued economic turbulence. While announcing the 90-day tariff pause on dozens of countries, Trump ratcheted up tariffs on Chinese imports, effectively raising them to 145% when levies imposed earlier this year are taken into account. He kept tariffs on imports from most other nations at 10% for 90 days after whipsawing on trade taxes for the past week. Tariffs on Canada and Mexico remain at 25% for goods not covered by the region's existing trade deal.
"We're constantly dealing with the uncertainty of the future and of our future supply chains," said Steve Shriver, the founder and CEO of Eco Lips, a Cedar Rapids, Iowa-based company that makes organic health and beauty products with ingredients sourced from more than 50 countries and sold in 40,000 stores nationwide. It has annual sales of around $30 million.
On Wednesday, the day Trump announced the pause, Shriver sent a letter to 300 clients for whom Eco Lips manufactures products for their own labels, letting them know that prices will rise and that time frames for delivery will be pushed out.
"I don't trust it. It's a 90-day pause. It could change again in 10 days," Shriver said. "There are still 10% tariffs across the board, and that's a substantial addition to our prices."
Shriver forecast that his 12-month cost of goods could rise by $5 million, atop his typical $10 million annual outlay for, among other things, ingredients that cannot be grown in the U.S., such as vanilla, coconut oil and cacao.
Other businesspeople said they have canceled purchase orders, halted expansion plans and delayed hiring.
'WE'RE SCRAMBLING'
Shriver and others said they have received price-increase notifications from suppliers and have already raised their own prices since Trump first started announcing tariffs last month to address what he said were unfair trade imbalances. Trump also has imposed tariffs in pursuit of goals that include keeping out migrants and illegal drugs and encouraging domestic manufacturing.
Paul Kusler's Into the Wind is a beloved Boulder, Colorado, kite and toy store that has been around for 45 years and has about $2.5 million in annual sales. Most of the goods Kusler sells are manufactured in China.
"The tariffs on China are simply unworkable; it's a serious threat to our business," said Kusler, standing amid a sea of colorful kites, Frisbees, puppets, stuffed animals, and every other toy imaginable. "We pay bills weekly. These price increases are happening now for items I already have in the door."
Kusler said the increased prices he has seen have been between 7% and 10% - but those reflect the brief period that tariffs on China were at 34% following Trump's "Liberation Day" announcement of the trade taxes on April 2.
Kusler thinks he can absorb around 3% of the increased costs. He added that he has already seen and will continue to feel suppressed consumer demand amid economic turbulence.
"People aren't going to buy toys if they are worried about prices rising for food and other staples," he said.
Emily Ley, the owner of Simplified, a Pensacola, Florida-based company that specializes in high-end office planners for women, said that since Trump announced tariffs on Chinese goods in 2017 during his first term, she has paid well over $1 million in trade taxes to the U.S. government.
She forecast that at the new tariff level for China, she will nearly match that $1 million within the next 12 months.
Ley said she tried for years to have her goods manufactured in the U.S., but could find no way to do it and still make a profit.
"This could put us under, put us out of business," she said. "We're scrambling right now over what to do."
One thing Ley is doing: suing the U.S. government, arguing the taxes unconstitutionally rely on statutes that have nothing to do with tariffs.
In Denver, Colorado, Aisha Ahmad-Post, the executive director for the Newman Center for the Performing Arts at the University of Denver, has spent more than a year managing a major renovation - the replacement of all 971 chairs inside the June Swaner Gates Concert Hall.
The Newman Center considered chairs from two U.S. suppliers and one in Canada. One of the American makers was far over their budget, and the other's chairs required the use of harsh dry-cleaning solvents as maintenance. In early 2024, Ahmad-Post ordered chairs from Montreal-based Ducharme for just over $560,000 and blacked out six weeks of hosting any shows for installation in mid-July.
On March 5, Ahmad-Post received a letter from Ducharme that it was required to comply with the new Trump trade taxes and "apply the corresponding tariffs to your project."
At the time, those tariffs for Canada were at 25% - an increase of $140,000 for the Newman Center seat project, an unwelcome development for an institution still trying to rebuild its rainy day fund that was depleted by the COVID-19 pandemic.
"The chairs are already in production, it's not like we can just pivot," Ahmad-Post said. "Now we're stuck trying to figure out how we'll pay for this."
The Trump administration released new guidance late Friday night on its tariff on China, exempting electronic devices such as smartphones and laptops.
The guidance, posted by U.S. Customs and Border Protection, which oversees collecting taxes on imports, could relieve some anxiety among consumers and tech giants like Apple and Microsoft, which manufacture many of their products in China, The Wall Street Journal reported. Around 20 electronic products — which also include memory cards and machines used to make flatscreens and tablets — will now be exempted from Trump’s massive “reciprocal” tariff on China. The exemption comes after the president increased the tariff on China in recent days in response to China’s retaliatory tariff on U.S. goods.
Stephen Miller, the White House deputy chief of staff for policy and Homeland Security adviser, wrote on X, “These products are subject to the tariff under the original IEEPA [International Emergency Economic Powers Act] on China of 20 percent.” The IEEPA tariff was the first one Trump imposed on China after taking office in January. The tariff was levied on China, along with Canada and Mexico, in an attempt to “hold” the countries to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.”
The Trump administration has suggested that the tariff on China will encourage companies, including Big Tech companies, to manufacture their products on U.S. soil, arguing that the move would be better for the economy and national security.
“President Trump has made it clear America cannot rely on China to manufacture critical technologies such as semiconductors, chips, smartphones, and laptops,” Press Secretary Karoline Leavitt said on Saturday, according to the Wall Street Journal. She added, “Companies are hustling to onshore their manufacturing in the United States as soon as possible.”
Last week, Trump announced a “90-day pause” on tariffs for most countries, citing their willingness to negotiate. The tariff “pause” didn’t end tariffs on foreign nations, but instead dropped them to a baseline 10% tariff rate, except for products from China, which he raised to 125%. With the IEEPA tariff factored in, the tariff on Chinese goods stands at 145%.
China responded to Trump’s move by increasing the tariff on U.S. imports to 125%, a move that will mostly affect American soybeans, pharmaceutical drugs, and airplanes. Trump is accusing China of “ripping off the U.S.A., and other Countries,” while China says it will not respond to “pressure, threats, and blackmail.”
Trump remains hopeful that China will come to the negotiating table to work out a new trade deal, but so far, the Chinese government has shown no signs of backing down from the trade war.
“A deal is going to be made with China,” the president said earlier this week. “A deal is going to be made with every one of them [countries], and there will be fair deals. I just want fair.”
President Donald Trump's administration wants to strike 90 trade deals in 90 days, but the challenges to quickly resolving the president's trade war are already apparent.
European Union trade chief Maros Sefcovic will on Monday be among the first foreign trade officials to come to Washington for urgent negotiations about the steep tariffs that Trump announced on April 2. The bloc is among the biggest U.S. trade partners with nearly $1 trillion in two-way trade last year.
But when Sefcovic arrives, Trump's top tariff negotiator, Treasury Secretary Scott Bessent, will be in Buenos Aires to show support for Argentina's economic reforms rather than in Washington, even though Argentina accounts for a mere $16.3 billion in total annual trade with the U.S.
Bessent's absence on Monday highlights doubts among trade experts about how effectively the administration can manage so many simultaneous negotiations and the overall prospects for reaching 90 deals in 90 days.
"Teeing up these decisions is going to take some serious negotiations," said Wendy Cutler, a former U.S. Trade Representative chief negotiator who heads the Asia Society Policy Institute. "There's no way during this timeframe we're doing a comprehensive agreement with any of these countries."
White House trade adviser Peter Navarro countered on Fox Business Network on Friday that Bessent, U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick could accomplish the job.
"So we're going to run 90 deals in 90 days. It's possible," he said.
Ultimately, Trump, "the boss, is going to be the chief negotiator. Nothing is done without him looking very carefully at it," Navarro said.
Trump started the 90-day countdown clock this week when he paused implementing his higher tariffs for many countries after financial markets went into a tailspin over fears of recession and inflation, among other factors. He said the 90-day pause would allow countries to reach bilateral deals with the U.S.
Regaining the confidence of financial markets is another critical objective during the 90 days. Investors sold U.S. Treasury debt this week, spiking interest rates and sending the dollar lower amid fears of a U.S. recession and resurgent inflation. Gold, a haven for investors in times of crisis, hit a record high.
Cutler said this turmoil would put pressure on the Trump team for some quick wins.
"The onus is going to be on them to show that they can quickly conclude agreements with countries, and instill some confidence in the market and with other trading partners that there is an off-ramp here," she said.
'HUGE TASK'
Growing friction with China, which did not get a reprieve from new U.S. tariffs and imposed countertariffs in equal measure, added to the gloom this week.
Reaching trade deals that satisfy both Trump and financial markets is a "huge task," Cutler said.
Instead, the Trump team will probably have to prioritize key countries and extend the 90-day pause for others, she said.
Even the smallest of Trump's first-term trade deals, revising the automotive and steel provisions of the U.S.-South Korea Free Trade Agreement, took over eight months while the comprehensive U.S.-Mexico-Canada Agreement on trade took more than two years.
But Greer, the USTR, said: "We can get to a point where the president can close these deals. He can negotiate, and if there's a good deal he can consider taking it, and if not, then he'll have the tariff."
The logistics of coordinating 90 sets of negotiations is just one hurdle for the thinly stretched administration.
Many key positions have not been filled and the officials who are there are often busy with other tasks, diplomats said, like the Treasury officials who met on Friday with Ukraine about a critical minerals deal.
Greer told Fox News that his 200-person staff was "working around the clock" as proposals were traded back and forth with foreign counterparts.
The Treasury has just one other senior official confirmed by the Senate, Deputy Treasury Secretary Michael Faulkender. Trump has not even nominated anyone for the key post of undersecretary for international affairs, and a career official is serving in an acting capacity.
USTR, too, is relying heavily on career staff, with several key deputy positions requiring Senate confirmation unfilled.
Another complicating factor is uncertainty about U.S. positions on trade matters, a second diplomatic source added, saying the top Trump trade advisers each had their own views.
Some countries, including Britain, Australia, and others, have discussed trade with the administration since Trump's inauguration in January, with little result.
"It's not like there's a sheet of paper with firm talking points that is changing hands," said one diplomatic source. "It's a process. And I'd say use the term 'talks', not 'negotiations.'"
Beijing increased its tariffs on U.S. imports to 125% on Friday, hitting back against President Donald Trump's decision to raise duties on Chinese goods and increasing the stakes in a trade war that threatens to upend global supply chains.
The retaliation intensified global economic turmoil unleashed by Trump's tariffs. U.S. stocks ended a volatile week higher, but the safe haven of gold hit a record high during the session and benchmark U.S. 10-year government bond yields posted their biggest weekly increase since 2001 alongside a slump in the dollar, signaling a lack of confidence in America Inc.
One U.S. survey of consumers showed inflation fears have mounted to their highest since 1981, while financial institutions have been forecasting an ever greater risk of recession.
Trump downplayed the market turbulence, predicting the dollar would strengthen and saying his 10% across-the-board tariffs represented a floor in most cases as countries strike their own trade deals with Washington.
"When people understand what we're doing, I think the dollar will go way up," he told reporters aboard Air Force One late on Friday. "The bond market's going good. It had a little moment, but I solved that problem very quickly."
The $29 trillion Treasury market saw an acute selloff following Trump's initial announcement about what he calls reciprocal tariffs. That turbulence was seen as part of what drove Trump to announce a 90-day pause for countries other than China on Wednesday.
The White House has said since then that more than 75 countries have sought trade negotiations with the United States and that future deals would bring certainty.
India and Japan are among the powers to have advanced toward trade talks, but generally, foreign leaders have puzzled over how to respond to the biggest disruption to the world trade order in decades.
The tit-for-tat tariff increases by the U.S. and China stand to make goods trade between the world's two largest economies impossible, analysts say. That commerce was worth more than $650 billion in 2024.
"We pretty much can do what we want to do, but we want to be fair. We can set the tariff and they can choose not to deal with us or they can choose to pay it," Trump said on Air Force One, repeating his contention that U.S.-imposed tariffs are paid by foreign exporters.
Although such levies can inflict pain on the exporter by making its products less competitive, tariffs are paid by the importer, which often passes the additional cost on to the consumer.
Trump, who said on Friday he was comfortable with the tariffs on China, has suggested that a deal with Beijing could be in the offing, too, heaping praise on President Xi Jinping despite their differences over trade. But there were no signs that the world's two largest economies were ready to back down.
"The president made it very clear: When the United States is punched, he will punch back harder," White House Press Secretary Karoline Leavitt told reporters on Friday.
The market responded by punishing both the dollar and bond prices.
Benchmark 10-year U.S. Treasury yields, which move opposite to price, registered their biggest weekly rise in more than two decades, with trading volumes well above average, amid fears that China may be offloading a large portion of its U.S. bond holdings.
Item 1 of 4 A China Shipping container is seen at the port of Oakland, as trade tensions escalate over U.S. tariffs with China, in Oakland, California, U.S., April 10, 2025. REUTERS/Carlos Barria
[1/4]A China Shipping container is seen at the port of Oakland, as trade tensions escalate over U.S. tariffs with China, in Oakland, California, U.S., April 10, 2025. REUTERS/Carlos Barria Purchase Licensing Rights, opens new tab
Treasury Secretary Scott Bessent is closely monitoring the bond market, Leavitt said.
A second day of data on U.S. inflation showed price pressures were not yet building broadly across the U.S. economy, although the Producer Price Index for March did show industrial metals prices rising due to import levies on things like steel and aluminum, in place for a month now.
"Tarifflation will be much more important for the outlook than backward-looking data," said Bill Adams, chief economist at Comerica Bank. "If tariffs stay in place, they will push inflation considerably higher inthe coming months."
The University of Michigan said its Consumer Sentiment Index dropped to 50.8 this month from 57.0 in March. Economists polled by Reuters had forecast the index falling to 54.5.
In a reversal of previous surveys, the latest one also showed weakening confidence among Trump's fellow Republicans.
Measures consumer sentiment by party identification
Consumers' 12-month inflation expectations soared to 6.7% this month, the highest since 1981, from 5.0% in March, according to the survey.
TRADE WAR WITH CHINA
This week, Trump announced his reprieve from levies on dozens of countries while ratcheting up tariffs on Chinese imports effectively to 145%.
China retaliated with more tariffs on Friday. China's finance ministry called Trump's tariffs "completely unilateral bullying and coercion."
Beijing indicated this would be the last time it matched U.S. tariff rises but left the door open for other types of retaliation.
"If the U.S. truly wants to have talks, it should stop its capricious and destructive behavior," Liu Pengyu, spokesperson for the Chinese embassy in the U.S., wrote on social media. "China will never bow to the maximum pressure of the U.S."
UBS analysts in a note called China's declaration "an acknowledgement that trade between the two countries has essentially been completely severed."
Leavitt, in turn, delivered a warning to Beijing: "If China continues to retaliate, it's not good for China."
On Thursday, Trump told reporters he thought the U.S. could make a deal with China. On Friday, Xi made his first public remarks on Trump's tariffs, telling Spanish Prime Minister Pedro Sanchez in Beijing that China and the European Union should "jointly oppose unilateral acts of bullying."
A table showing sectors of imported products and the corresponding estimated price increases that could result from Trump's sweeping tariffs, ranging from 10% for medical diagnostic equipment to 30% for computer parts and toys & video games.
Rick Woldenberg thought he had come up with a sure-fire plan to protect his Chicago-area educational toy company from President Donald Trump’s massive new taxes on Chinese imports.
“When he announced a 20% tariff, I made a plan to survive 40%, and I thought I was being very clever,” said Woldenberg, CEO of Learning Resources, a third-generation family business that has been manufacturing in China for four decades. “I had worked out that for a very modest price increase, we could withstand 40% tariffs, which was an unthinkable increase in costs.”
His worst-case scenario wasn’t worst-case enough. Not even close.
The American president quickly upped the ante with China, raising the levy to 54% to offset what he said were China’s unfair trade practices. Then, enraged when China retaliated with tariffs of its own, he upped the levies to a staggering 145%.
Woldenberg reckons that will push Learning Resource’s tariff bill from $2.3 million last year to $100.2 million in 2025. “I wish I had $100 million,” he said. “Honest to God, no exaggeration: It feels like the end of days.”
‘Addicted’ to low-price Chinese goods
It might at least be the end of an era of inexpensive consumer goods in America. For four decades, and especially since China joined the World Trade Organization in 2001, Americans have relied on Chinese factories for everything from smartphones to Christmas ornaments.
As tensions between the world’s two biggest economies — and geopolitical rivals — have risen over the past decade, Mexico and Canada have supplanted China as America’s top source of imported goods and services. But China is still No. 3 — and second behind Mexico in goods alone — and continues to dominate in many categories.
China produces 97% of America’s imported baby carriages, 96% of its artificial flowers and umbrellas, 95% of its fireworks, 93% of its children’s coloring books and 90% of its combs, according to a report from the Macquarie investment bank.
Over the years, American companies have set up supply chains that depend on thousands of Chinese factories. Low tariffs greased the system. As recently as January 2018, U.S. tariffs on China averaged just over 3%, according to Chad Bown of the Peterson Institute for International Economics.
“American consumers created China,” said Joe Jurken, founder of the ABC Group in Milwaukee, which helps U.S. businesses manage supply chains in Asia. “American buyers, the consumers, got addicted to cheap pricing. And the brands and the retailers got addicted to the ease of buying from China.”
Slower growth and higher prices
Now Trump, demanding that manufacturers return production to America, is swinging a tariff sledgehammer at the American importers and the Chinese factories they rely on.
“The consequences of tariffs at this scale could be apocalyptic at many levels,” said David French, senior vice president of government affairs at the National Retail Federation.
The Yale University Budget Lab estimates that the tariffs that Trump has announced globally since taking office would lower U.S. economic growth by 1.1 percentage points in 2025.
The tariffs are also likely to push up prices. The University of Michigan’s survey of consumer sentiment, out Friday, found that Americans expect long-term inflation to reach 4.4%, up from 4.1% last month.
“Inflation’s going up in the United States,” said Stephen Roach, former chairman of Morgan Stanley Asia and now at Yale Law School’s China Center. “Consumers have figured this out as well.”
“No business can run on uncertainty.”
It’s not just the size of Trump’s tariffs that has businesses bewildered and scrambling; it’s the speed and the unpredictability with which the president is rolling them out.
On Wednesday, the White House said the tariffs on China would hit 125%. A day later, it corrected that: No, the tariffs would be 145%, including a previously announced 20% to pressure China to do more to stop the flow of fentanyl into the United States.
“There is so much uncertainty,” said Isaac Larian, the founder of MGA Entertainment, which makes L.O.L. and Bratz dolls, among other toys. “And no business can run on uncertainty.”
His company gets 65% of its product from Chinese factories, a share he is trying to winnow down to 40% by the end of the year. MGA also manufactures in India, Vietnam, and Cambodia, but Trump is threatening to levy heavy tariffs on those countries, too, after delaying them for 90 days.
Larian estimates that the price of Bratz dolls could go from $15 to $40 and that of L.O.L. dolls could double to $20 by this year’s holiday season.
Even his Little Tikes brand, which is made in Ohio, is not immune. Little Tikes depends on screws and other parts from China. Larian figures the price for its toy cars could rise to $90 from a suggested retail price of $65.
He said MGA would likely cut orders for the fourth quarter because he is worried that higher prices will scare off consumers.
Calling off China production plans
Marc Rosenberg, founder and CEO of The Edge Desk in Deerfield, Illinois, invested millions of dollars of his own money to develop $1,000 ergonomic chairs, which were to start production in China next month.
Now he’s delaying production while exploring markets outside the U.S., including Germany and Italy, where his chairs wouldn’t face Trump’s triple-digit tariffs. He said he wants to see how the situation plays out.
He had looked for ways to make the chairs in the United States and had discussions with potential suppliers in Michigan, but the costs would have been 25% to 30% higher.
“They didn’t have the skilled labor to do this stuff, and they didn’t have the desire to do it,” Rosenberg said.
Making Chinese imports go ‘kaput’
Woldenberg’s company in Vernon Hills, Illinois, has been in the family since 1916. It was started by his grandfather as a laboratory supply company and evolved over the years into Learning Resources.
The company specializes in educational toys such as Botley: The Coding Robot and the brainteaser Kanoodle. It employs about 500 people — 90% in the United States — and makes about 2,400 products in China.
Woldenberg is reeling from the size and suddenness of Trump’s tariffs.
“The products I make in China, about 60% of what I do, become economically unviable overnight,” he said. “In an instant, snap of a finger, they’re kaput.”
He described Trump’s call for factories to return to the United States as “a joke.”
“I have been looking for American manufacturers for a long time ... and I have come up with zero companies to partner with,” he said.
The tariffs, unless they’re reduced or eliminated, will wipe out thousands of small Chinese suppliers, Woldenberg predicted.
That would spell disaster for companies like his that have installed expensive tools and molds in Chinese factories, he said. The stand to lose not only their manufacturing base but also possibly their tools, which could get caught up in bankruptcies in China.
Learning Resources has about 10,000 molds, weighing collectively more than 5 million pounds, in China.
“It’s not like you just bring in a canvas bag, zip it up and walk out,” Woldenberg said. “There is no idle manufacturing hub standing fully equipped, full of engineers and qualified people waiting for me to show up with 10,000 molds to make 2,000 products.”
