The main justification given by President Trump for implementing tariffs on US imports was the massive US trade deficit in goods. One of the largest components of that trade deficit was electronics goods, largely imported from Asian countries, especially China. So, one might expect that the tariffs that are implemented would hit electronics goods hard, but that has not been the case so far. Trump’s exemptions for many key products and changes in the supply chain for electronics goods have meant that, thus far, display end products have, on average, faced minimal tariffs.
Before Trump’s second term, the supply chain for electronics goods was dominated by China. Many electronics goods, including smartphones, mobile PCs, monitors and other PC peripherals, were exempt from tariffs under the Information Technology Agreement (ITA) signed in 1996. The logic of the ITA was that information technology goods would boost productivity, so any country that imported the goods would be better off making the goods as inexpensive as possible. In the wake of the ITA and China’s entry into the World Trade Organization (WTO), China came to dominate the global supply chain for these goods.
Even before the 2024 election, there were some moves to diversify the electronics supply chain. The growing geopolitical friction between the US and China, combined with shutdowns during the pandemic, convinced many companies that they should adopt a “China + 1” strategy, sourcing at least part of their purchases from outside China. Even so, in 2024, China was responsible for 77% of smartphone imports to the US, plus 66% of the mobile PCs and 78% of the computer monitors.
Trump’s election accelerated the trend to shift supply chains away from China. During the first quarter of 2025, Trump promised to initiate wide-ranging tariffs, but actually implemented only a few. China, along with Mexico and Canada, was hit with a tariff related to the trade of fentanyl. Then, on April 2, Trump’s “Liberation Day”, he announced severe tariffs on countries with which the US had a large trade deficit. This included a 34% tariff on goods from China and a 48% tariff on goods from Vietnam.
The Liberation Day tariffs led to sell-offs in both the stock and bond markets, and after one week, Trump postponed them for 90 days. Instead, a standard 10% tariff would apply to most imports. Further, he announced on April 11 that electronics goods, including smartphones, mobile PCs and PC peripherals, would be exempt from the reciprocal tariffs.
The charts here demonstrate the effect of the electronics supply chain shifting its sourcing from China to other countries. If there were no such shifts, and the share of imports from China had remained constant at Q4 2024 levels, the effective tariff would have increased from 0% in Q4 2024 to 8% in Q1 2025 and 15% in Q2 2025. With the fentanyl tariffs starting in Q1, the supply chain started shifting out of China, and China’s share dropped from 76% in Q4 2024 to 51% in Q1 2025. By Q2 2025, China’s share had dropped to 13%, and the average tariff rate on smartphones fell to only 3%.
Average Tariff Rate for US Imports of Smartphones and Mobile PCs
Mobile PCs followed a similar pattern. China represented 65% of mobile PC imports in Q4 2024, and this dropped to 57% in Q1 2025 and then to only 12% in Q2 2025. Without the shift, the average tariff on mobile PCs in Q2 2025 would have been 13%, but the actual average tariff was only 2%.
Whether it is by design or accident, the relatively low average tariff on electronics goods means that these tariffs are not adding much to US inflation. To the extent that this happens in other import-heavy industries, the impact of the Trump tariffs on inflation will be greatly diminished compared to the headline numbers.