Microsoft, HP and Dell are asking their suppliers to accelerate their production to be prepared for the "layer of tariffs" that is coming with the arrival of President-elect Donald Trump.
In a new report from Nikkei Asia, it appears that big tech giants, especially Microsoft, HP and Dell, are carrying out a process of "stockpiling" components to mitigate the additional costs they could face. The report indicates that Microsoft has urged its suppliers to accelerate production, especially of its cloud-based products, and has also requested that suppliers relocate outside of the countries that will receive the tariffs.
Not only Microsoft, but also HP and Dell, two of the largest PC makers, have advised their respective suppliers to increase production in the coming months, and both companies are formulating plans to reduce its dependence on Chinese suppliers, ultimately ensuring that tariffs do not significantly impact the company's overall revenue.
The strategy is to relocate production facilities to new countries, as tariff policy seems imminent. The findings indicate that, overall, the tariffs will cause significant price increases for consumers in the US: - 46% on laptops and tablets - 40% on video game consoles - 26% on smartphones.
The investigation also reveals that the 60% tariff applied to all imports from China will essentially drive production to other countries, rather than the United States. Although Trump may have a case for the tariff policy, it is likely to dampen consumer interest in the markets, which could lead to a drop in revenue for American businesses, an outcome that does not benefit the U.S. economy. It will be necessary to wait to see the impact that markets will have once these tariffs come into effect.
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