ASUS company executives have warned customers to expect price rises across its products. The increases are coming because ASUS has had to move its manufacturing out of China following President Trump’s recently imposed tariffs.
Tariffs on China
Since coming into office, President Trump has imposed tariffs on a number of countries around the world. Currently, goods coming from China are subject to a 20% tariff. This means that an American company that used to pay $1,000 for a product from China will now have to pay $1,200. The company in China still gets the same $1,000 and the U.S. government keeps the extra $200.
How do tariffs work?
President Trump has imposed the tariffs in an attempt to reduce the number of products being imported. His stated aim is to make Chinese goods more expensive so consumers will choose U.S.-made products instead. However, for a large range of items, such as computer components, there isn’t an alternative being made in America. Therefore, importers and retailers in the U.S. will have to pay the tariffs and ultimately pass the extra expense on to the customer.
ASUS Co-CEO S.Y. Hsu explained that the company is planning to move its manufacturing out of China to avoid the tariffs. However, moving your manufacturing facilities to another country is an expensive process. “As we ship to new manufacturing lines in new countries, we are going to need new tooling and testing setups that are going to end up costing extra,” Hsu said. “We will try to limit these costs to within a reasonable level. However, as we make further adjustments to production lines it may become possible that we need to offset some of these costs to our clients.”
What next?
There have already been price rises across ASUS’s RTX 5000 graphic card range. Newegg is selling the ASUS ROG Astral GeForce RTX 5090 for $3,359. This is an increase of $560 on the launch price of $2,799 in January. Both prices are also much higher than the $1,999 starting price recommended by Nvidia.
In addition, the tariffs are impacting many other companies, not just ASUS, as China is a major manufacturing hub for graphics cards. Foxconn, which makes products for a number of brands, is moving its manufacturing to Taiwan, Mexico and Vietnam.
What we think
In theory, tariffs can be a useful tool to protect American manufacturers. Hopefully, by making foreign products more expensive, consumers will choose those made in the U.S. instead. However, these American-made goods are likely to cost more already, otherwise shoppers would have chosen them over the imports previously. As such, consumers will still face increased prices in the shops.
Also, where no U.S.-made alternatives exist, it’s the American public who ends up paying the tariffs as importers and retailers pass the costs on to them. Hopefully, common sense will prevail and President Trump will step away from his use of tariffs before a full-blown trade war breaks out. While tariffs are a great way for the U.S. government to make money, it’s the American public who pays the price.
