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Like US automakers and other manufacturers, the technology sector is increasingly outsourcing production to China, where manufacturing and assembly of products is less expensive than in the United States. In the last few decades, Intel, Dell and Apple have begun to opt for overseas manufacturing in order to take advantage of lower labor costs and align operations in emerging markets.
Intel, for example, designs and manufactures most semiconductors in the United States, but relies on Chinese facilities for the assembly of their chips, which will now be taxed. Moving these manufacturing and assembly operations out of China is unrealistic, the company warned, saying "it is too expensive to move established and integrated supply chains".
Google, Dell, IBM and others believe that pricing will increase costs for businesses and consumers, hampering the ability of the United States to dominate the next generation of technology, such as 5G wireless networks. According to industry, rising prices will slow down business growth, increase costs for consumers, and put other countries, such as China, in a more competitive position to dominate technology.
"Rates are affecting the heart of the Internet's infrastructure," said Rob Atkinson, president of the Information Technology and Innovation Foundation, a think-tank funded by technology companies such as Microsoft, Google and Intel. "If we impose tariffs on Chinese products, we should impose them on products that harm the Chinese, not us."
Mr. Trump does not share this view, considering tariffs as a weapon to force China to change its business practices that the administration – and many companies, including technology companies – say unjust.
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