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Sourcing Guide & Market Intelligence

Canada and Mexico tariffs to negatively impact the electronics industry

• On March 4, 2025, the US imposed a 25.0% tariff on goods imported from Mexico and Canada, which applies in addition to other duties or fees that are in place, with limited exceptions for electronics products. However, as of March 6, 2025, all goods compliant with the United States-Mexico-Canada Agreement (USMCA) will be exempt from tariffs until April 2, 2025.
• After the tariff took effect, Canada immediately imposed 25.0% tariffs on goods imported from the United States. Mexico also announced plans to impose retaliatory tariffs and non-tariff measures on imports from the United States later this month.
• According to the US Census Bureau, the United States imported $87.1 billion in electronics, or 18.2% of goods, from Mexico in 2024, and $11.2 billion in electronics, or 2.3% of goods, from Canada. Many electronics manufacturers are based in Mexico due to the logistical advantages and low labor costs, and 89.0% of Mexican exports of electrical and electronic equipment are destined for the United States.
• Electronics retailers are warning of higher prices with the new tariff as upstream vendors pass along higher costs. Best Buy CEO Corie Barry reported that Mexico is the second largest source for products sold by their company, and price increases are expected.
• Due to the integrated nature of the electronics production chain in North America, the impact of tariffs will result in supply chain disruptions and higher costs as supply chains are restructured to mitigate tariff-related costs. According to the Joint Economic Committee, computers, phones, and other electronics could see price increases of up to 11.0%.

China tariffs to severely impact electronics industry

• In February 2025, the Trump Administration imposed an additional 10.0% tariff on all imports from China with no exemptions or exceptions. In addition, the de minimis shipping exemption for imports under $800 was suspended, exposing these imports to all applicable tariffs; however, the repeal is paused currently until procedures and systems are properly in place.
• In late February 2025, the United States announced an additional 10.0% tariff on imports from China on top of the 10.0% imposed earlier in the month, which took effect on March 4, 2025.
• China is the largest exporter of electronics to the United States, accounting for 24.7% of all US imports of electronics. As a result, tariffs have the potential to escalate costs and disrupt supply chains, creating uncertainty in these markets.
• Electronics manufacturers can be expected to pass on higher tariffs to buyers. The Consumer Technology Association estimates that 10.0% broad-based tariffs would increase laptop computer prices by 45.0% and monitor prices by 31.2%, smartphone prices by 25.8%, lithium-ion batteries by 12.1%, computer accessories by 10.9%, connected devices by 10.2%, televisions by 9.0%, and desktop computers by 6.2%.
• Electronic components originating from China, such as capacitors, resistors, LEDs, switches, or connectors, will raise input costs for domestic manufacturers reliant on these products. The tariff on semiconductor imports from China is now 60.0%, which can create more expensive challenges for buyers procuring electronic components.

The DOJ proposes Google breakup in latest tech antitrust action

• In August, Google was found guilty of operating as a monopoly and engaging in anti-competitive practices through the operation of its search engine business.
• In response to this ruling the Department of Justice (DOJ) has stated it will seek a breakup of Google’s business segments, among other similarly harsh penalties. While the actual penalty Google receives must be approved by the judge, the DOJ’s proposed penalties signal a zero-tolerance policy toward tech monopolies.
• During the last few years, the Federal government has significantly increased its enforcement actions against major technology companies in an effort to contest the high level of market share concentration in this sector.
• These actions include high-profile anti-trust lawsuits against Amazon, Apple, and Meta, in addition to the case against Google. Consequently, the results of these lawsuits could significantly affect the structure of a wide range of tech markets.