Like it or not, America’s cheap consumer technology owes its existence to Chinese assembly lines.
Years of state support in China has led to the country’s domination in manufacturing, giving American tech companies cheap access to labor and ultimately assembly of their products. But tariffs have flipped this narrative on its head. As a result, these firms have seen their stock prices drop by over 15% since mid-February peaks.
China’s manufacturing efficiency is just hard to match. With an overwhelmingly large workforce and deep supplier networks, components like screens and batteries can be sourced from nearby facilities, allowing manufacturers to make last-minute changes without delay. Meaning places like Vietnam and India, where some final assembly is already happening due to cheaper labor, are fighting an uphill battle trying to compete.
And although the U.S.-China retaliatory tariffs have been put on pause for now, the uncertainty remains. A pause on tariffs doesn’t implore a company like Apple, which assembles over 90% of its iPhones in China, to uproot its supply chain. That requires massive upfront costs and long-term confidence in trade policy. So, let’s see some handshakes – negotiations can’t last forever.
At some point, consumer tech firms will have to adjust to a new normal, but don’t get used to those cheap earbuds and smartphones. There’s still plenty to get sorted out.
