b'How CIOs can prepare for Trumps tariffs planComponent bottlenecks can also impact supply chains,making some items that CIOs might want to pre-orderTheres uncertainty about the impact of President-elect suddenly go out of stock. The situation is forcing CIOs to Donald Trumps proposed tariffs, but analysts agree the planmake decisions about where theyre going to get products is likely to result in higher costs for electronics.and how, he said.In recent weeks, the incoming administration proposed How CIOs can respond tariffs on all imports, including a 25% tariff on imports fromDespite these worries, Smith said he hasnt seen a widescale Mexico and Canada and 100% tariffs on products frommovement of CIOs frontloading purchases of laptops,BRICS countries. The move will also affect products servers and other goods that potentially will be impacted by manufactured in the U.S. with foreign parts. future tariffs.You have complete servers coming in from China and alsoThats not surprising with servers since you dont have a lot have chips coming in from Singapore and assembled some- of data centers on prem, he said. Tariffs may, however, where like Texas. Youre still going to have tariffs,impact companies that were already grappling withsaid James Smith, senior director at Gartner. increasing cloud costs and were in the process of or planning to to build on-prem facilities to data centers. The details have yet to be set in stone, but the implications have raised concern about a spike in the cost of electronics.With physical goods, CIOs can talk to vendors now to see where items are physically located before tariffs go intoIts really up in the air exactly how much the tariffs areeffect. That way, those vendors cant add upcharges togoing to be, said Rick Kowalski, senior director of businessproducts that are already manufactured and sitting in U.S. intelligence at the Consumer Technology Associa- warehouses. tion (CTA). The overall sentiment were hearing is [tariffs] are going to go up and theyre going to go up on many If CIOs know theyre going to need to make hardwarecountries, but theres still a lot we dont know. purchases in the near future, they can also pay a commitment fee to have first access to items being made right now, with While CIOs cant predict the future, they can make plans toall their components already made in the U.S., Smith said. shoulder the impact of these changes as much as possible.While tariffs are a big concern, Smith said that its not the How much will critical items go up? only potential issue looming on the horizon ahead of the In October, CTA published a report conducted by Tradeincoming Trump administration.Partnership Worldwide, LLC on how tariffs could affect the prices of many things CIOs purchase, based on the frame- Immigration and visa changes could heavily impact technol-work Trump proposed before the election: 60% tariff onogy services that CIOs rely on. Thats especially true for products from China and up to 20% on other nations acrossworkers in the U.S. on H-1B visas, which are often used for the board. tech jobs. Any changes could have a major impact on tech-focused businesses.The analysis found that if these tariffs go into effectand the full cost of tariffs is passed onto the buyerprices willWhile attempted changes to these and other visas thatgo up on multiple items that CIOs purchase. The cost of lap- happened during the first Trump administration were largely tops and tablets would surge by 45%, adding $357 andblocked, that may not be the case the second time around. $201 respectively to their average retail costs. Smartphones would increase by more than 25%, with an average cost in- When speaking to vendors about potential tariff pricecrease of $213, while the cost of monitors would jump 31%. increases, Smith said CIOs should also be talking to them about their contingency plans if U.S.-based H-1B employees There arent any good sourcing workarounds as China is theare no longer going to be allowed to work in the country.major supplier of these products. In 2023, China accounted for 78% of U.S. smartphone imports, 79% of U.S. laptop andItgoeshandinhandwiththetariffpiece,Smithsaid. tablet imports, and two-thirds of U.S. imports of monitors, according to the report. By Jen A. Miller The CTA doesnt anticipate that the tariffs would spur new U.S.-based manufacturing of these products. For example,Contributor monitor imports from China would drop by 80% with an overall 44% percent decline on all imports, according to the report. At the same time, the organization estimates U.S. production would increase by 10%, not enough to combat price increases.17'