Tariffs and trade with China has been a hot topic in the news recently. The tariffs impacting the steel and automobile industries have been widely covered but there are many additional industries that could potentially feel the effects of these tariffs, including our own.
Last week the US Trade Representative to China, Robert Lighthizer, released a list of additional goods (800 products, 6,031 tariff subheadings) worth $200 billion that could face 10% tariffs after a public comment period. Printed circuit boards (PCBs) were included on that list (HTSUS Subheading 8534.00.00). Although most people might assume that a tariff on PCBs would only impact PCB manufacturers and distributors, this tariff would cause an unavoidable cost increase that could potentially be passed on to any industry or manufacturer that requires PCBs. This would mean nearly the entire electronics industry and all of its subsidiaries will feel the financial impact of tariffs.
Value of Imports from China in 2017
According to an IPC survey,
“87 percent of [IPC US members] import raw materials, components, and/or equipment from China.”
When asked to rate the effect of the tariffs on their business on a scale of 0 (no impact) to 100 (threat to survival), 35% said the impact would be severe, 23% predicted moderate impact, and 42% stated minimal impact. IPC also states
“Survey respondents also expressed concern that the tariff increases would increase the cost of base materials to produce high-reliability electronics. Higher prices would depress demand among customers and make U.S. Manufacturers less competitive in the global marketplace. Another respondent suggested the tariffs will create cost confusion in the marketplace and impose new administrative burdens as inventoried goods are mixed with newly imported goods.”
These tariffs have not been officially decided upon by the US government and they will not go into effect until after August 30, 2018. Currently there is a public comment period where impacted industries can voice their concerns. If the tariffs are enacted as is, the electronics industry can expect an increase in cost as the majority of the PCBs used in our very competitive industry are made in China.
Tariffs Could Raise Costs for PCBs
Summary
Proposed U.S. tariffs on printed circuit boards (PCBs) imported from China could significantly impact the electronics industry, driving up costs across nearly every sector that relies on PCBs. With 87% of IPC members importing materials or components from China, the effects could extend well beyond PCB manufacturers, increasing costs for raw materials, depressing demand, and creating competitiveness challenges for U.S. companies.
While the tariffs were still under review during the public comment period, industry leaders were encouraged to voice concerns, as the potential financial burden could reshape supply chains, pricing, and global market dynamics.
See our latest post on Tariffs on Your Invoice: Demystifying Those Extra Charges for a more current overview of the tariffs impacting the PCB industry.
Key Takeaways
- PCBs Included in Tariff Proposal: Printed circuit boards were named under HTSUS Subheading 8534.00.00, making them subject to potential 10% tariffs.
- Industry-Wide Impact: Because nearly all electronics require PCBs, the cost increase would affect manufacturers across multiple industries, not just PCB producers.
- IPC Survey Findings: 35% of U.S. PCB companies anticipated severe impact, 23% moderate, and 42% minimal, with many citing competitiveness concerns.
- Supply Chain Strain: Tariffs could raise raw material costs, increase administrative burdens, and create pricing confusion as old and new inventories mix.
- Action Steps for Companies: Businesses were encouraged to submit comments to regulations.gov and contact representatives before the August 17 deadline to influence policy decisions.
