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Like American automakers and other manufacturers, the tech sector has increasingly outsourced production to China, where manufacturing and assembly of products is cheaper than in the United States. In recent decades, Intel, Dell, and Apple began shifting manufacturing overseas to take advantage of lower labor costs and align operations closer to customers in emerging markets.
Intel, for instance, designs and manufactures most semiconductors in the United States but relies on Chinese facilities for assembly of their chips, which will now be taxed. Moving those manufacturing and assembly operations outside of China is unrealistic, the company has warned, saying “it is too expensive to relocate established and integrated supply chains.”
Google, Dell, IBM and others say the tariffs will increase costs for companies and consumers, hindering America’s ability to dominate the next generation of technology, like 5G wireless networks. Rising prices, the industries say, will slow business growth, increase costs for consumers and put other nations, like China, in a more competitive position to dominate tech.
“The tariffs affect the heart of the infrastructure of the internet,” said Rob Atkinson, president of the Information Technology & Innovation Foundation, a think tank financed by tech companies including Microsoft, Google and Intel. “If we are going to impose tariffs on Chinese goods, we should impose them on items that hurt the Chinese, not us.”
Mr. Trump does not share that view, seeing the tariffs as a weapon to force China to change trade practices that the administration — and many companies, including tech firms — say are unfair.