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World War Fee Trump's tariffs may have been ruled unlawful, but they are still in place and continue to affect the market, with the threat of price hikes on smartphones causing prospective buyers to hold off until the situation becomes less volatile.
The US Court of International Trade handed out its judgment this week that the Trump administration had overstepped its authority by invoking emergency legislation to impose swinging tariffs on the nation's trading partners.
Yet Trump's team are still hellbent on talking up import taxes, and has already challenged the ruling. Levies are still in place for now after a decision overturning the lower court’s ruling last night, leaving behind more uncertainty over whether the levies will stay or go, and what effect this will have on supply chains.
This doubt has forced market watcher IDC to lower its forecast for smartphone shipments for in 2025, trimming expected growth in the vitally important US market to 1.9 percent from the 3.3 percent predicted earlier.
Worldwide shipments are likely to be limited to 1.24 billion units, representing an increase of just 0.6 percent year-on-year, versus the 2.3 percent estimated by the research biz previously.
The Middle Kingdon is expected to grow three percent, partly thanks to government subsidies intended to stimulate demand.
IDC estimates there could be 4 percent growth in the average selling prices for smartphones in the US market, but any further negative impact will be reduced by the "unique structure of the US smartphone market," where most devices are bought through carriers which fuel demand by offering robust trade in deals and interest free financing programs.
As a result, the price rise will likely have less immediate impact on US buyers, especially with many new premium devices launching in the second half of the year.
"Since April 2, the smartphone industry has faced a whirlwind of uncertainty. While current exemptions on smartphones have offered temporary relief, the looming possibility of broader tariffs presents a serious risk," said IDC senior research director Nabila Popal.
That risk includes the likelihood of investments being deferred, as highlighted by Jefferies last month.
"In our view, the pause in tariffs and now exemptions on electronics doesn't remove all business uncertainty. This creates earnings risk across the sector," Jefferies stated in a report at the time.
IDC's EMEA VP for Devices, Francisco Jeronimo, noted that many US technology companies were heavily dependent on China's highly efficient and deeply integrated manufacturing ecosystem, and that includes smartphone makers.
"This deep integration leaves these companies highly exposed to disruptions stemming from trade policy shifts. Even for companies actively pursuing diversification, China often remains the primary source for these complex, high-volume products due to the sheer scale and efficiency challenges elsewhere," he said.
One such firm is Apple, which was singled out for special attention by President Trump recently, and threatened with import tariffs of at least 25 percent on its devices for not moving manufacturing back to America.
But analysts say that even this threat is unlikely to bring Apple's manufacturing home to US soil.
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It isn't just smartphones that are affected, of course. IT giant Lenovo took a hit of $50 to $60 million in the first quarter of this year from tariffs, blaming their "being implemented so suddenly that we didn't even have time to prepare."
PC and printer maker HP also blamed lower than expected profits on "additional tariff costs that could not be fully mitigated in the quarter."
All in all, Trump's tariff plans are creating uncertainty for the US and global economies. If that was the intent, then it's a job well done by the very stable genius. ®
