Are tech tariffs a waste of time?

[Jay Goldberg]

The big picture: The global supply chain is evolving in response to trade policies, particularly U.S. tariffs targeting China. While these measures aim to incentivize domestic manufacturing, the practical outcomes tell a different story. Chinese companies, rather than losing market share, have adapted by setting up production facilities in tariff-exempt countries like Thailand, Malaysia, and Vietnam.

At CES 2025, we met a company from Eastern China that sells copper and fiber optic cables for data centers. This is almost a commodity business. There are thousands of companies that can make copper cables, a few dozen that can make fiber optic cables, and probably ten or so that can make both of sufficient quality to be used in leading data centers.

We chatted for a bit. They told us about their products, and we exchanged the latest insights on industry trends. Finally, we asked about price. Their response was, "Which factory do you want the product from?"

Editor's Note:
Guest author Jonathan Goldberg is the founder of D2D Advisory, a multi-functional consulting firm. Jonathan has developed growth strategies and alliances for companies in the mobile, networking, gaming, and software industries.

It turns out this company has two factories: one in China and the other in Thailand. These plants use identical equipment and produce the same products. The company's entire catalog is available from either site.

"Why do you have two factories?" we asked. Their response was that the plant in Thailand was built two years ago entirely for U.S. customers. During the last Trump administration, the U.S. government imposed a tariff of roughly 20% on these products when sourced from China. The tariff for products coming from Thailand is 0%. So, after a few years, the company opened a plant in Thailand.

Finally, we asked about price again. "Oh, the prices are the same. Except all the raw materials for the Thai plant come from China, and we have to ship them in, which makes Thai prices a little higher." Admittedly, Thai prices are not 20% higher than China prices, but close enough.

This trend is occurring across the supply chain. CES was full of companies promoting their factories in Malaysia, the Philippines, Vietnam, and Malaysia again. However, all the owners are Chinese companies. Some have local joint venture partners, but in every case we've found, the China-based company is the controlling shareholder, providing all the management, R&D, and sales.

We are happy to have an academic discussion about the benefits and costs of tariffs, but the practical reality on the ground is that all new tariffs may benefit Thai workers, but they will not bring jobs to the U.S. China has spent the past four years preparing for more tariffs, and in this corner of the industry, they seem fully equipped to handle them.

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Are tech tariffs a waste of time?

 

[dznmdrwutmynamiz]

That's bait mate

 

[Squid Surprise]

Building a separate factory might work for the large companies… not sure it’s practical for everyone though. I suspect plenty of smaller Chinese companies will be hurt by these tariffs.
Whether this will gain any US jobs is another thing - but Trump has never been concerned with “doing”. Just “appearing to be doing”.

 

[The Talking Tech]

That's bait mate

It's bait only for those that don't feel comfortable debating about it.

 

[The Talking Tech]

Let's see if the president-elect of the U.S gets to really do what he promised to do with those tariffs.

I suspect that was all just all political blah, blah, blah.....

 

[Squid Surprise]

It's bait only for those that don't feel comfortable debating about it.

Actually… it’s bait for those who ARE comfortable with debating it… kind of what bait is for

 

[godrilla]

It's bait only for those that don't feel comfortable debating about it.

It's not like they gave us a choice. Choice 1 California model choice 2 this!

 

[SRB]

Let's see if the president-elect of the U.S gets to really do what he promised to do with those tariffs.

I suspect that was all just all political blah, blah, blah.....

What I don't get, is China steels information, ignores patents, undercuts pricing with slave/massively underpaid labor, steels data, and so on. And the responses from tech juinkies and the masses is mind blowing. Well, nothing will work, prices will increase, the US can't stop the manufacturing drain, so the solution to all of this is :"Let's just enjoy our cheap stuff, let them take over the markets, let them become the tech leaders by stolen technology and undercutting competition, and everything will be fine. After all, there's no point since they'll succeed and we'll fail no mater what we do. Why not just accept failure and move on.

 

[yRaz]

Only reason this stuff was so cheap in the first place is that it's made with slave labor. They'll probably switch their manufacturing to another country that's also in the third world to avoid the tariffs. Thing is, China will probably invest money in said country to avoid tariffs, will own the production there and gain political influence over it.

The two main costs that go into anything are ENERGY and LABOR. In the US, the #1 thing influencing the cost of LABOR is HOUSING/REALESTATE. So perhaps we should work on bringing the cost of housing down? Using near zero percent interest rates to buy real-estate to use as an investment vehicle has done irreparable damage to our economy.

And as someone who works in the construction industry, you're going to have a hell of a time competing with the rates that commercial construction pays to workers. The worst part is, most commercial buildings are empty or near empty. They're also mostly funded by infustructure bills made under biden. We haven't seen a crash yet. We have about 2-3 more years before most of these contracts are complete and there isn't going to be any private equity building them. After that, construction workers will likely "accept" lower rates to go and work in residential construction. But those "bids" made on new housing? they wont change and the builders are just going to pay less because there are going to be a bunch of unemployed skilled laborers and pocket the difference.

So, no, the tariffs likely wont don't anything NOW because any chance they would have had at working before are ruined by the real-estate market of the last few years. Even if they did bring manufacturing back, the costs for people to move into towns around factories would be absurd.

And, yes, I'm currently working on moving out of construction into robotics manufacturing(the manufacture of robots and robotics equipment, not manufacturing with robots) because the writing is on the wall. I might have a good job now but there are, at best, 3 years left of work in my field. I haven't had plans come across my desk for new construction that seems real in several months. I use to review new ones weekly.

If we could have prevented private equity from buying up all the exist realestate, the tariffs MIGHT have worked. However, any manufacturing that comes back to the US is going to be done almost entirely with robots or CNC machines. That's where all the jobs are going to be at in 5 years. Just look at the UAW, those jobs aren't coming back

The only people that make money in a gold rush are those selling picks and pans to the miners

 

[hahahanoobs]

US lowered tariffs on China in the 70's for their benefit, and now that China is getting a little success, the US wants to profit from it while killing progress and innovation at home. Kinda like how big companies buy up the little companies and shut them down to maintain the status quo. If you have no competition, there is no reason to advance. We saw that with Intel right?

 

[The Talking Tech]

Actually… it’s bait for those who ARE comfortable with debating it… kind of what bait is for

Bait is another word for "trigger' for those uncomfortable to participate in a conversation.

 

[NotYourITguy]

The two main costs that go into anything are ENERGY and LABOR. In the US, the #1 thing influencing the cost of LABOR is HOUSING/REALESTATE. So perhaps we should work on bringing the cost of housing down? Using near zero percent interest rates to buy real-estate to use as an investment vehicle has done irreparable damage to our economy.

The continued push for higher density housing directly is at odds with lowering housing costs. Concentrating wealth in an area can only ever drive prices up further and permanently so. We need the great plains states and other low population density regions to become new job hubs for knowledge workers, not manufacturing. This will still drive prices way up in those areas compared to what they are used to, but it will be less expensive than existing metropolitan areas. Ultimately it's more of an averaging than actual cost reduction since the locals will inevitably be priced out of their own home towns.

I don't see any means of lowering housing costs without an economic disaster. Making housing an unprofitable investment is difficult because any taxes get passed directly to would-be renters.

Also considering the strong preference of large entities to outsource knowledge workers too these days, the wheels of globalization are turning slowly and nobody is immune. Something bad will eventually happen as a result of offshoring, workers will be onshored again, and then the cycle will repeat.

 

[dznmdrwutmynamiz]

Bait is another word for "trigger' for those uncomfortable to participate in a conversation.

Nah, it's just bait, plain and simple. This is a tech site. This article invites a mostly-political discussion. You're displaying your own bias by assuming that others are "triggered" or unwilling to participate in such a discussion. It's simply not what I (and I suspect many people) come to this site for. Feel free to carry on discussing it as you see fit. Or get distracted by throwaway remarks like mine, if you like. It's your dime!

 

[Squid Surprise]

Bait is another word for "trigger' for those uncomfortable to participate in a conversation.

Bait means “lure”… usually for fishing or trapping animals… guess it worked on you … and me…
But if you aren’t comfortable posting in this thread, then it WASN’T bait for you… hence my previous comment

 

[yRaz]

The continued push for higher density housing directly is at odds with lowering housing costs. Concentrating wealth in an area can only ever drive prices up further and permanently so. We need the great plains states and other low population density regions to become new job hubs for knowledge workers, not manufacturing. This will still drive prices way up in those areas compared to what they are used to, but it will be less expensive than existing metropolitan areas. Ultimately it's more of an averaging than actual cost reduction since the locals will inevitably be priced out of their own home towns.

I don't see any means of lowering housing costs without an economic disaster. Making housing an unprofitable investment is difficult because any taxes get passed directly to would-be renters.

Also considering the strong preference of large entities to outsource knowledge workers too these days, the wheels of globalization are turning slowly and nobody is immune. Something bad will eventually happen as a result of offshoring, workers will be onshored again, and then the cycle will repeat.

Make real-estate as an investment illegal, force them to sell. Make loans to invest in single homes illegal, effective immediately. If you want to invest in property, you have to pay cash for it.

This whole system where you can leverage assets to basically print exponential amounts of money has caused mass inflation. The problem is only going to get worse and lead to some type of Neo-Feudalism

 

[RudyBob]

Tariffs are effective tools and when used correctly will do the job intended. Remember the USA holds the good cards. America first

 

[manowar51]

China effectively employs slave labour to deliver goods so cheap. The fact that someone is trying to do something about this can only be a good thing.

Of course, if you care more about a 20% markup on your electronics than humane working conditions for the people making your electronics then you might be upset at these tariffs.

 

[Kashim]

Tariffs are effective tools and when used correctly will do the job intended. Remember the USA holds the good cards. America first

This is the typical uninformed, uneducated American view when it comes to tariffs.

First, most Americans who voted for the Orange Grifter don't even understand how tariffs work in the first place. They're an import tax, plain and simple. China doesn't pay for the tariffs, much like Mexico didn't pay for the border wall. When a company (Amazon, Costco, Wal-mart, etc) imports something from China they pay the same amount they always did. When those goods reach the border it's the American government that charges those American companies whatever amount of tariffs are being imposed. That extra cost that Amazon had to pay to import the goods gets past on to the American consumers. Simply put, tariffs = taxes. The price of everything goes up, so say hello to inflation.

Second, tariffs the way the Orange administration plans to impose them do not work. PERIOD. Their intended purpose is to force American companies to produce those good domestically instead of importing them. The problem is that it costs orders of magnitude more (in some cases) to produce those goods in America. When you put tariffs on China all these American companies simply import those goods from the next cheapest country. You would have to put MASSIVE tariffs on basically 80%+ countries in the world before those American companies would be forced to move production back to the USA. At which point the price of those goods would be sky high. You think $2,000 iPhones are expensive? Try making them in America and they would be $5,000 or more.

Third, a lot of the goods being imported from China simply can't be manufactured in the USA due to complex supply chains that can take many years or decades to establish. Putting tariffs on those goods would be completely ineffective.

 

[Kashim]

Of course, if you care more about a 20% markup on your electronics than humane working conditions for the people making your electronics then you might be upset at these tariffs.

As I explained in my previous post, putting 20% tariffs on Chinese goods doesn't do anything. All these American companies will simply buy those goods from the next cheapest country (Hint: it's not the USA). If you put tariffs on that country, they will move to the next cheapest place, etc. You would have to outright ban imports form 80% of the world before they would be manufactured domestically. It's not simply a matter of being willing to pay 20% extra for your electronics to put an end to Chinese slave labor, as you put it.

 

[toooooot]

They are merely a tool, a tool that can do damage in unexperienced hands and good in skilled hands.
See, no baiting, no biases, just objective info.

 

[human7]

Wise or no, the threat of tariffs encouraged me to spend big today on a new rig (as opposed to tomorrow when the prices might be higher). I wanted to wait longer for more places to have the Nvidia 5000 series on order, for the reviews to come in, etc. But after looking at prices again and again for the past couple weeks: the threat of tariffs pushing up prices another 20% was enough to make me preorder. I don't really expect prices to jump that much in the next 48 hours, but I suppose they could. I'd give it a 50/50 chance. Well, maybe not, but a high enough chance that I didn't want my wallet to have to pay for loosing the bet.

The cryptocurrency bubble was a hard time for gamers, one that I went through without buying a thing for (well, at least as far as gaming tech goes), and if tariffs are the next hard thing for the next four years, I'm not going to wait that out. Better to get ahead of it.

 

[clivedoffline]

Using China as a means of cheap production was OK while CEOs and shareholders of American companies were making bank. Now that Chinas home grown industries threatens that flow of money America has to impose tariffs to ensure that Americas elite still get their cut. This will be ordinary Americans paying more for products, the extra money will be funneled in grants, programs and initiatives that should create more jobs in America but in reality the majority of that money will end up being paid out in dividends and CEOs wages.

 

[TooQik]

The point of any tariff is to push up the price of imported goods to make locally produced goods more attractive price wise. The problem with this approach is you have to be producing the goods locally in the first place, so if you don't already produce it locally, you're simply pushing local companies to source and import from alternative suppliers who either don't attract as high of a tariff, or attract no tariff at all.

The big question is, how much of the goods that will incur a tariff can be, or are already being, produced in the US?

 

[Underdog]

In a more sensible world, the tariffs might cause people to buy more durable goods and keep them for longer instead of plodding along the consumerism treadmill by buying trash.

 

[ET3D]

This is a bad article because it only discusses tariffs on China. That was never the case and likely won't be.

In general tariffs achieve what they're for. They encourage people to buy local products because foreign products cost most. This in turn can encourage companies to move production locally.

Tariffs also have side effects. One side effect is reciprocal tariffs from other countries, which hurt exports.

Another side effect is that badly managed tariffs can raise local production prices, because these often depend on foreign parts or materials.

And of course there's the direct effect of raising prices.

In the end, I think that carefully planned tariffs can have a beneficial effect on the local economy, even if they have some drawbacks. The worse the planning, the more negative effects they're likely to have. Are they a waste of time? Well, they certainly make life more interesting for many people.

My guess is that, like last time, US tariffs will start big then grow smaller with time.