How the tech war affects your favorite gadgets

How the crisis that engulfed Huawei could affect DJI, OnePlus or Lenovo

Smartphones

Karen Chiu

Published: 9:31pm, 27 May 2019

Why you can trust SCMP

This article originally appeared on ABACUS

When news came that future Huawei smartphones will no longer come with Google apps like Google Maps and the Google Play store, it’s likely that most American consumers reacted with a collective shrug. After all, Huawei handsets -- save for a few models from sub-brand Honor -- aren’t officially sold in the US.

But there are other Chinese gadgets far more popular with American shoppers that might fall victim to the brewing US tech war with China.

Laptops

Lenovo is one of the top three PC vendors in the US. As with all PC makers that rely on Chinese factories, Lenovo is facing new potential tariffs proposed by President Trump earlier this month. The plan, scheduled for a public hearing in June, will tax laptop imports by up to 25%.

Lenovo has said it can move more of its manufacturing outside China if the tariffs become too high. Other companies with less flexible arrangements, though, may not have that luxury in the short run.

Adjusting supply chains is also costly. Apple, for instance, currently assembles most of its MacBooks in China, according to a Jeffries analyst. The supply chain and skills of overseas workers are just a couple of the reasons Apple co-founder Steve Jobs told then-US president Barack Obama, “Those jobs aren’t coming back [to the US].”

In any case, it’s likely that at least some PC makers will have to cover the new tax by raising product prices. It’s a cost that consumers will have to bear.

Check out Lenovo ThinkPad on Amazon

Smartphones

The new OnePlus 7 Pro, which hit the shelves earlier this month, could potentially be subject to future US tariffs. (Picture: Chris Chang/Abacus)

Smartphones are also subject to Trump’s new tariff plan.

Although US sellers carry few Chinese handset brands, one notable exception is OnePlus. It was T-Mobile’s fourth best-selling brand in the last quarter of 2018, according to Counterpoint Research. It’s also the fifth most popular high-end smartphone in the US.

OnePlus, the Chinese smartphone startup that made a mark in the West

OnePlus produces many of its phones in China, although it does have facilities in other parts of the world. Any handsets shipped from China now face an import tax as high as 25%.

Again, it’s not just OnePlus and other Chinese phones that could be impacted. Apple, whose iPhones are assembled in China, could also suffer.

(We have reached out to OnePlus for comment and will update this story if we hear back.)

Check out OnePlus 7 Pro on Amazon

Drones

If you own a hobbyist drone, chances are it’s either a Phantom, Mavic or Spark from DJI. It’s been estimated that the Chinese company makes nearly 80% of the drones sold in North America.

The story of drone pioneer DJI

There are now questions about the future of these aerial vehicles. Earlier this week, the Department of Homeland Security issued an alert warning US companies about security risks associated with Chinese-built drones. This comes two years after the US Army banned DJI drones over security concerns, though DJI has maintained it doesn’t send user data back to China.

The development came just days after President Trump issued an executive order that paves the way for a nationwide ban on Huawei telecommunications equipment. That followed an existing ban enacted last year that applied only to US government agencies and contractors.

While DJI has said it hasn’t been “materially impacted” by the trade war, it also added that it’s hard to predict what will happen next. Will the drone maker still be able to use US-designed components as it does now? Will its drones be kept out of the US market entirely? All this remains to be seen.

Check out DJI Phantom 4 Pro on Amazon

Chinese-Made Chargers and Cables

Computing accessories like chargers and cables are subject to US tariffs on Chinese goods. (Picture: South China Morning Post)

Before Trump’s most recent tariff proposal, most consumer goods like laptops and smartphones were exempted from import taxes. One exception is computing accessories, including phone and laptop chargers, as well as electric cables. These cheap electronics, as popular in the US as everywhere else, are often made in China.

One famous manufacturer of these gadgets is Anker, a China-based company. Their products, such as USB cables and power banks, are among the best-selling items in their categories on Amazon. Anker has not responded to requests for comment.

Anker, the Chinese startup behind Amazon’s most popular power banks

It is possible that companies that ship these products from China to the US will choose to absorb the tariffs themselves. Apple, for instance, hasn’t yet raised prices for its chargers and cables.

At the end of the day though, a tax rate of 25% is substantial. That’s especially true for vendors that, unlike Apple, operate on thin profit margins. It’s possible that very soon, Americans will have to pay more for their electronic accessories.

For more insights into China tech, sign up for our tech newsletters, subscribe to our Inside China Tech podcast, and download the comprehensive 2019 China Internet Report. Also roam China Tech City, an award-winning interactive digital map at our sister site Abacus.

Post