What the US-China trade war means for South African tech prices

Hardware products such as PC components and TVs could see a price increase in South Africa, due to an escalating trade conflict between the United States and China.

The United States and China are engaged in a trade war, with both countries hiking tariffs on goods imported from the other.

Some of the hardest-hit companies have been Chinese display and electronics manufacturers, which export components used in the production of TVs, smartphones, and other devices.

The US has proposed tariffs on $200-billion worth of Chinese goods, which would greatly affect prices across a number of industries.

China has fired back against US threats of punitive tariffs with 25% tariffs on US food and energy exports – such as coal, crude oil, beef, and whiskey.

And while this trade war may be beyond our borders, it could have a notable effect on the prices paid to import products into South Africa.

The increased cost of manufacturing and importing tech products could trickle down to local consumers, who would end up paying more for their favourite devices.

Trade war

According to a recent report by Bloomberg, the share prices of major display manufacturers have plummeted following the imposition of import tariffs targeting them.

The tariff hikes may also affect major brands which use components built in China, including Hisense, Samsung, and TCL.

While major smartphone manufacturers remain relatively safe from the tariff increases, many companies with large production bases in China could suffer.

In turn, this could have a major effect on local technology prices – as South Africa imports a large amount of its technology products from Europe and the United States.

If the trade war escalates further, and more tariffs are proposed, then an increasing number of products may see price increases across the world.

A Fuzzy Picture

South African prices

To find out what impact local consumers can expect to feel, MyBroadband asked Efficient Group economist Dawie Roodt about the US-China trade war.

Tariffs imposed by the United States on Chinese products currently vary between 10-20%, depending on the goods in question.

Roodt said that while the prices of certain products imported into South Africa may increase by up to 20%, the overall impact on local tech products would not be extensive.

“Given time, the whole thing will be bad for everybody involved,” said Roodt.

“But in the short term, I do not think there will be much of an effect on South African consumers.”

He added that while certain products could see price increases, the trade war could result in South Africa importing more products directly from China.

“This may get Chinese companies to increase direct exports to South Africa and result in lower prices for Chinese products locally,” said Roodt.

“On a net basis, these increased tariffs on Chinese products could possibly be a good thing for South Africa.”

Now read: Sentech’s Aldred Dreyer to take over digital TV migration project

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What the US-China trade war means for South African tech prices