Programmable Logic Controllers
Sourcing Guide & Market Intelligence

Tariffs to escalate prices for electronics and computing equipment

• The Trump administration’s reciprocating tariffs, which will increase the tariff on all products imported from nearly all US trade partners, are set to take effect on August 7 and are likely to drive price increases across a wide range of sectors.
• The United States is highly reliant on imported electronics, communication equipment, and computing devices, having imported more than $472 billion worth of electronics in 2024, or about half of the total domestic supply. Starting August 7, imports from key computer and electronics producers such as China (54,0%), Japan (15.0%), South Korea (15.0%), Thailand (19.0%), Vietnam (20.0%), and Taiwan (20.0%) will be subject to new tariff rates. Trade deals for many countries are still being negotiated, and these rates are subject to change.
• For this reason, the US electronics industry is highly exposed to price increases and supply chain disruptions when the tariffs take effect. For example, the cost of iPhones, which are predominantly manufactured in China, could rise by as much as 43.0% in response to tariffs, according to projections by Rosenblatt Securities.
• Overall, the Yale Budget Lab anticipates tariffs will increase the average cost of computers and electronics by 18.7% in the short term.
• The tariffs exempt semiconductors, limiting the cost increases for domestic electronics manufacturers, but the lack of domestic electronics assembly capacity means that this exemption will have a limited effect.

The FBI has warned that Chinese government hackers could disrupt critical infrastructure in the United States in the event of a conflict with China.

• The FBI announced on January 31 that it had thwarted an attempt by the Chinese government hacking group “Volt Typhoon” to plant malware onto electric power, water treatment and transportation systems in the United States using compromised end-of-life small office/home office (SOHO) routers from Cisco and Netgear. End-of-life devices have been discontinued by manufacturers and no longer receive software patches to eliminate vulnerabilities, which makes these devices attractive targets for hackers.
• US officials assess that China might disrupt critical US infrastructure to prevent the United States from responding to a Chinese attack on Taiwan. Volt Typhoon has been particularly active in Hawaii and Guam, which house some of the largest US military and naval installations in the Pacific.
• The FBI announced on September 18 that it had disrupted a botnet from another Chinese government hacking group known as “Flax Typhoon”. Flax Typhoon had infected 260,000 networking devices around the world, including SOHO routers, internet protocol (IP) cameras, digital video recorders (DVRs), and network-attached storage (NAS) devices.n
• The Cybersecurity and Infrastructure Security Agency (CISA) recommends that organizations use its Known Exploited Vulnerabilities (KEV) Catalog to identify any vulnerabilities in their systems. Furthermore, organizations can subscribe to receive KEV Catalog updates from the agency and may contact the agency for advice.

Russian invasion of Ukraine is putting additional strain on US chip supply

• Until recently, the United States sourced nearly all of its neon gas (an essential material in the laser imprinting process to produce semiconductors) from Ukrainian and Russian producers. Previous conflicts between the two nations, specifically related to the Crimea conflict in 2014, resulted in a nearly 600.0% increase in the price of neon.
• The Russian Ministry of Industry and Trade announced in early June that it would be limiting neon gas exports as part of its sanctions against countries it views as unfriendly. This move will add to lead times and prices for neon.
• Downstream semiconductor manufacturers keep stockpiles of neon gas that have allowed them to continue manufacturing chips, though it is unknown how long these stockpiles will last. Semiconductor manufacturers will likely pay higher prices for neon gas outside Ukraine as global supplies dwindle.