Trump won, now what?

The recent election of Donald Trump as President of the United States is set to significantly influence the electronics industry, a sector already navigating the complexities of global trade, supply chain management, and technological innovation. As Trump begins his second term, the implications for this vital industry are multifaceted, encompassing trade policies, regulatory changes, and shifts in international relations, particularly with China.

Trade policies and tariffs. One of the most immediate impacts of Trump’s presidency on the electronics industry will likely stem from his approach to trade. During his first term, Trump implemented a series of tariffs aimed at reducing the trade deficit and protecting American manufacturing. These tariffs, particularly on Chinese imports, have already reshaped the landscape for electronics manufacturers.

In his second term, Trump has proposed even more aggressive tariffs, including a potential 60-percent tariff on all goods from China. Such measures could drastically increase costs for electronics companies that rely on Chinese manufacturing for components and finished products. The Consumer Technology Association has warned that these tariffs could lead to significant price increases for consumers, with estimates suggesting that laptop prices could nearly double and smartphones could see a 26-percent increase. This scenario poses a substantial risk to consumer electronics affordability and could dampen overall market demand.

Supply chain disruptions. The electronics industry is characterized by complex global supply chains that depend on the seamless flow of components across borders. The potential for heightened tariffs may force manufacturers to seek alternative suppliers or relocate production, which could disrupt established relationships and increase operational costs.

As companies navigate these challenges, they may also face delays in production and delivery, further complicating their ability to meet consumer demand. The uncertainty surrounding trade policies could lead to a more cautious approach to investment in new technologies and product development, as companies weigh the risks of potential tariff impacts against the need for innovation.

Regulatory environment and innovation. Trump’s administration has historically favored deregulation, which could have mixed implications for the electronics industry. On one hand, reduced regulatory burdens may foster innovation and allow companies to operate more freely. However, this approach could also lead to a lack of oversight in critical areas such as data privacy and cybersecurity, raising concerns among consumers and advocacy groups.

The electronics sector, particularly in areas like artificial intelligence and data management, may experience a shift in regulatory focus. Trump’s administration has indicated a desire to dismantle existing frameworks that govern technology development, potentially leading to a more laissez-faire environment. While this could spur rapid advancements in certain technologies, it may also create risks related to consumer protection and ethical considerations.

The future of the CHIPS Act. The CHIPS and Science Act, passed during the Biden administration, aims to bolster the US semiconductor manufacturing and reduce reliance on foreign supply chains. During his campaign, Trump criticized the CHIPS Act, labeling it as “so bad” and suggesting that tariffs would be more effective for manufacturing than the funding provided by the act.

While some experts express concern about potential repeal efforts, others believe that Trump may recognize the bipartisan support for the CHIPS Act and its importance for American manufacturing. The semiconductor industry has seen significant investments due to the act, particularly in states like Arizona, where companies like Taiwan Semiconductor Manufacturing Co. Limited and Intel are expanding operations. If Trump chooses to modify rather than repeal the CHIPS Act, there may be opportunities to streamline funding processes or expand the scope of the Act to include energy generation, given the high energy demands of semiconductor manufacturing. This could lead to a more robust framework that supports both semiconductor production and sustainable energy initiatives.

The projected impact of Donald Trump’s presidency on the electronics industry is complex and multifaceted. His proposed trade policies, particularly aggressive tariffs, could lead to significant price increases for consumers and disrupt established supply chains. While deregulation may foster innovation, it also raises concerns about consumer protection and ethical considerations.

As the industry navigates these challenges, companies will need to remain agile and responsive to the evolving landscape. The ability to adapt to changing trade dynamics, regulatory environments, and consumer preferences will be crucial for success in an increasingly competitive and uncertain world. The future of the electronics industry will depend on how well it can balance the pressures of cost, innovation, and ethical responsibility in the face of a shifting political landscape.

—————-

Arthur Tan was president of Ayala chipmaker, IMI for 23 years. He is currently advisor to AC Industrial Technology Holdings.

—————-

Business Matters is a project of Makati Business Club ([email protected]).