What are tariffs, and why are they the hot topic for 2025?
The short version is that a tariff is a tax paid by companies importing goods to a specific country. Tariffs are used as a trading strategy to offset imbalances caused by competition and different levels of importing/exporting by countries and to protect core markets.
Every country imposes tariffs, which vary based on the product or industry, and many are agreed to via trade agreements.
For example, let's say the US imposed a 125% tariff on goods from China on April 9th, 2025 (which actually happened). A company importing a $1,000 laptop from China must now pay $1,250 as a tax.
So, instead of a $1,000 laptop, it would now cost $2,250!
Who ultimately pays the tariff is up for debate and varies by industry and individual companies. The assumption is that most of the tariff is ultimately paid for by consumers as companies pass on the higher price, meaning things cost more (although people's wages don't increase to make up for it).
These higher prices could reduce purchases, causing companies (and economies) to shrink due to forced lower demand.
Alternatively, a company can swallow the cost with reduced profit margins. Companies may do this to maintain a current market lead that, were they to raise their price, could let their competitors gain market share due to variations in supply chains and origin of export. The downside is that reduced profits are bad for stockholders and could cause a company's valuation to drop with its stock.
In 2025, tariffs have become very relevant due to the Trump administration suddenly raising tariffs across 70+ countries. The ultimate goal of this strategy includes bringing manufacturing jobs back to the US (so companies can avoid paying the tariff altogether), renegotiating free trade agreements with individual companies to favor US priorities, and bringing in money to offset expected tax cuts.
For Windows Central, we cover PCs, laptops, GPUs, processors, and gaming consoles, all of which are negatively affected by tariffs, especially the high ones imposed on China.
Most electronics are manufactured in China, meaning that PCs, laptops, memory, GPUs, etc., will dramatically increase in price or become unavailable as companies (like Razer) halt importing new devices to the United States.
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