IPC International Community magazine an association member publication
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IPC COMMUNITY 18 WINTER 2025 These key U.S. trading partners have signaled the possibility of retaliatory measures in response to higher U.S. tariffs. Such signals underscore escalating trade ten- sions and reflect how economic tools are being used to address broader issues, including geopo- litical rivalry, supply chain disrup- tions, and market competitive- ness. The specifics of any additional tariffs—when they would be implemented and which goods they would cover—remain uncer- tain. Their potential impact is also unclear. However, research on previous tariff increases suggests negative consequences not only for trade volumes but also for businesses. Work by U.S. economists exam- ining the effects of the 2018 U.S. import tariffs and subsequent retaliatory tariffs, found signifi- cant declines in both imports and exports 1 . Moreover, the prices of tariff-targeted imports did not decrease, indicating tariffs were fully passed on to consumers and firms. Foreign exporters did not substantially lower their prices to offset the tariffs, meaning Amer- icans effectively bore the cost of the tariff increases. They estimate losses to U.S. consumers and import-reliant firms amounting to $51 billion, or 0.27% of GDP. Sim- ilarly, a study by economics pro- fessors for CESifo Working Papers 2 found U.S. importers paid 93% of U.S. tariffs while Chinese import- ers absorbed about two-thirds of the retaliatory tariffs China imposed. In a subsequent U.S. study 1 , economists found that the U.S.- China trade war created net export opportunities for some countries, rather than merely diverting trade. Many "bystander" countries increased their exports of taxed products to other global markets, excluding both the U.S. and China. The results high- light that countries capable of substituting U.S. or Chinese exports—operating along down- ward-sloping supply curves— benefited significantly from the trade war. In recent weeks, IPC surveyed electronics manufacturers and suppliers to understand how they plan to navigate these poten- tial tariffs. A majority (68%) expressed at least a moderate level of concern about the impact on the electronics manufac- turing sector. This widespread apprehension—spanning across regions—reflects the high stakes involved. The electronics sector anticipates that potential tariffs could threaten cost structures,