‘Severe strain’ on tech supply chains will cause more price rises in electronics

The “uncertainty” created by US President Donald Trump’s changing tariffs policy is putting tech manufacturing supply chains under “severe strain”, and sparking price rises, experts have said.

On Monday, Sony confirmed it was raising the price of some PlayStation 5 consoles in the UK, Europe, Australia and New Zealand because of what it called “challenging” economic conditions.

Over the weekend, the US government said it would exempt electronics from its sweeping new tariffs on imports to the US, but also indicated that this reprieve would only be temporary while it decided on a tariff regime for the sector.

Geraint John, vice president of research at supply chain intelligence firm Zero100, said more announcements similar to Sony’s price rises could be on the way.

“President Trump’s decision to exempt smartphones and computers from sky-high US import tariffs may provide only temporary relief for Apple, Google, Dell and other consumer electronics companies,” he told the PA news agency.

“They remain hugely dependent on China, along with Vietnam and India, for manufacturing, so any increase in tariffs on these countries above the current 10-20% level is likely to see consumers paying more for their devices.

“Sony’s decision to raise prices for its PlayStation 5 by around 25%, including for European customers, could be the first of many such announcements over the next few weeks.

“Uncertainty about the direction of US trade policy and tariffs strategy is putting tech supply chains under a severe strain.

“As well as incurring extra airfreight costs to move products between countries, these headwinds will reduce tech firms’ ability to plan forward production with confidence.

“Such factors reduce supply chain efficiency and may exacerbate the upward pressure on prices.”

Ben Barringer, global technology analyst at Quilter Cheviot, said the “tariff rollercoaster” was disruption that would “weigh heavy” on the sector.

“Things are moving very quickly, so whether or not this is the settled position remains to be seen. As ever, in Donald Trump’s world the only certainty is uncertainty,” he said.

“Clearly, announcements like this will weigh heavily on tech companies until they get a much more obvious operating environment.

“The actual impact on earnings remains to be seen, but with the latest results season starting in earnest this week, every statement will be closely analysed to get a view on what tariffs will do to the bottom line, and crucially, what other companies are doing with their IT spend.

“Somewhat perversely, we could actually see some earnings go up in the short-term as companies stockpile semiconductors and other tech equipment, but investors will want to see what is expected to happen over the course of this administration.”

But he said there appeared to be some positives for the biggest firms, who he suggested may be able to negotiate individual exemptions because Mr Trump had shown some willing to offer reprieves in some areas.

“This confirms that technology and much of the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) will be treated differently when it comes to tariffs,” he said.

“While they may not get a full exemption, it does hopefully mean the impact will be lessened.

“Secondly, investors are starting to be able to articulate the problems and dimension the real impact of different tariff rates may be. It is still like pinning the tail on donkey, but it is becoming much clearer to work out how exactly the likes of Apple and Nvidia will be impacted.”