Tariffs Analysis: Higher Prices, Lower Sales Volumes And Lots Of Uncertainty
April 11, 2025 by Dave Haynes
Very arguably, about the only certainty right now with the supply chain and costs for the electronics that are fundamental to digital signage deployments is that there is no certainty.
While displays, PCs and other gear are coming from all over the place, a lot of the components originate in China – which as I type this has been slapped with a combined 145% tariff for goods coming into the biggest market for digital signage outside of China, the United States. Experience has shown that could change yet again in minutes, hours or days.
The 125% is on top of a 20% related to China’s fentanyl production.
Costs will go up and in some cases skyrocket as this carries on, so demand will slow and projects will be delayed or cancelled. But business analysts suggest the bigger problem is the uncertainty – with companies and boards having no ability to do planning and forecasting.
It’s worth noting that while a product might be assembled in another country, many of its internal components likely originate from China. Even brands based in other countries often rely on Chinese manufacturing facilities or components.
China is the dominant manufacturing hub for pro AV equipment, with estimates of somewhere between 50-70% of the components used in pro AV systems originating from China. That includes:
- Raw electronic components (capacitors, resistors, circuit boards);
- Display panels and processing components;
- Audio components;
- Mounting hardware and physical enclosures.
For finished products, the percentage varies by category:
- Video displays (LED walls, commercial displays): Very high, with Japanese and Korean brands using no-label Chinese-made displays in many cases and putting their badge on them;
- Audio equipment: There is significant Chinese manufacturing but also strong production in other countries
- Control systems are more widely made around the globe.
It’s a simpleton analysis, ‘cuz that’s my capacity, but if a flat panel display cost $1,000 at the start of this year, and it is something like a Hisense or TCL that is unambiguously a Chinese-made product, it would now (at least in theory) cost $2,450.
Which is problematic.
Bob O’Brien, the research director for Counterpoint Research, spends most of his time studying supply chain issues as it relates to TVs, pro displays and smaller screens for devices like smartphones and tablets. He has posted a piece on the company site – you need an account to read – that gets into what’s going on and may play out.
O’Brien’s piece from Tuesday, so things have already changed a couple of times since, gets into the background first, and then pretty bluntly describes the impact:
The tariffs, O’Brien writes, will lead to a massive increase in the cost of display products imported to the US. Nearly 100% of display end-products sold in the US are imported from other countries. The table below outlines the effects for the four major display applications, showing imports by country and the effect on ASP. In 2024, smartphones, mobile PCs and monitors were not subject to any tariffs, so the average selling price (or more precisely, the average import price – typically before any retail profit margin) is simply the value of imports divided by the units.
Source: Counterpoint
TVs have not been duty-free, and TV imports from most countries were subject to a 3.9% tariff in 2024. With punitive tariffs imposed on China during Trump’s first term, TV imports from China were subject to an additional 7.5% tariff, for a total of 11.4%. On the other hand, TVs imported from Mexico fell under the USMCA trade deal and were imported without paying any tariff. The figures in the table for 2024 ASP include the impact of the tariffs on TVs.
The impact on the import cost will be dramatic, adding nearly $200 to the cost of a smartphone from China, $150 for a smartphone from Vietnam and $120 for a smartphone from India. Mobile PCs (notebook PCs and tablets) will see costs increase by $200 or more. The high-end PCs assembled in Taiwan, which cost $1,000 on average to import in 2024, will cost $320 more to import in 2025.
The only line in this table that is unaffected by the April 2 order is TVs from Mexico. These fall under the USMCA and so do not face any new tariffs. The established supply chain for most TVs meant that larger and more expensive TVs were assembled in Mexico while smaller TVs were assembled in China or Southeast Asia. With the new tariff regime, this will change and TV makers will likely shift production of the smaller TVs to Mexico.
For smartphones, mobile PCs and monitors, there appears to be no short-term fix other than to raise prices. Many companies in the display supply chain hurried some shipments in December 2024 and January 2025 to avoid the threatened tariffs, so it will take some time for prices to increase. But it is likely that future orders will be reduced if they are subject to tariffs.
Higher prices for display end products will lead to lower sales volumes. We have no prior basis to make a good estimate of the magnitude of the impact, but with an average of a 46% increase in import costs, it is sure to be substantial. Of course, if other countries respond and tariffs escalate even higher, and the resulting blockage of trade leads to a worldwide recession, demand would fall even further.
I’d love to hear from companies wrestling with all this, to understand what they’re doing about it and how this affecting planning and sales. Add to the comments or send me a note!
Several months ago, I commented in reply to one of your newsletters about China being the equivalent of buying stolen goods from a “fence” at hugely discounted prices. I thought when those days come to an end, prices are gonna be higher because they were artificially low to begin with.
Here we are