Gadget-Makers Warn ‘There Will Be No Christmas’ if Tariffs Persist
Big tech companies may be able to weather America’s tariffs on Chinese goods.
Small tech companies, The Wall Street Journal (WSJ) reported Sunday (April 27), may not be as lucky.
According to that report, ongoing trade wars could mean that gadget-makers are forced to raise prices. Consumers could face empty shelves, more frequent software updates and more subscriptions.
The WSJ report uses the example of Flaus, an electric flosser whose parts are assembled in China. CEO Samantha Coxe says the company plans to only raise prices as a last resort if the tariffs persist, but will remove benefits like free shipping.
Her more pressing concern is whether the current stock will hold out until Amazon’s Prime Day in the middle of July, when there’s normally a price discount.
“That’s a huge event for a product like Flaus,” she says.
If the tariffs stay high, there could be more empty shelves in the next few months, the report added. Without a long-term plan, “There will be no Christmas,” Grant Prigge, CEO of smart air-purifier maker Mila, told WSJ.
“Everything you’re buying today was imported pre-tariffs. But those warehouses will run out in the next 30 to 90 days,” he said.
The report added that recurring revenues from subscriptions can provide a lifeline during these times. For example, Mila doesn’t feel the need to raise prices as 70% of customers have signed up for filter auto-refills, which amounts to a $118-a-year subscription.
The report follows last week’s Business Inflation Expectations Survey from the Federal Reserve Bank of Atlanta showing that businesses expect their unit costs to increase by 2.8% over the coming year, a figure that’s 0.3 percentage points higher than it was in March.
Asked if they thought they could pass these greater costs along to their customers, the answers depended on the size of the business, the survey found.
“Small firms reported a lower ability to pass through unit cost increases, while medium and large firms reported a large distribution of ability to pass through unit cost increases,” the survey said. “Goods reported slightly greater pass through unit cost increases than services.”
Meanwhile, a recent report by S&P Global found that companies are charging higher prices for goods and services due to rising costs caused by tariffs, import prices and labor costs.
Prices charged for goods and services climbed at their steepest rate in 13 months in April, with tariffs fueling an especially sharp increase in prices of manufactured goods.
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