Tariff hike on Chinese imports to hurt US smartphone market: Research

The implications of US tariff expansions will affect its smartphone market as revenue from imported Chinese handsets account for 86 per cent of total smartphone revenues in the US, Counterpoint Research has said.

Seventy-four per cent of total US smartphone shipments in 2017 came from China amounting to 130 million units, according to Counterpoint's latest research from its Market Pulse programme.

"The implications that this potential tariff could have does not bode well for the US smartphone market. The move is seen as negative and we immediately saw a decline in telecom stocks," Jeff Fieldhack, Research Director, Counterpoint, said in a statement late Friday.

The top five smartphone brands which are exported from China include Apple, LG, ZTE, Motorola and Samsung.

"Since 75 per cent of US smartphones are imported from China, a 15 per cent or 25 per cent tariff would be substantial and likely drive prices higher. For example, when import duties were recently raised in India, iPhone prices rose and so did prices for iPhone accessories, parts and the Apple Watch," Fieldhack added.

Explaing the tariff's effect on the component ecosystem, Maurice Klaehne, Research Analyst, Counterpoint, said: "Looking beyond smartphone imports, the tariff will also have a trickle-down effect on components and the markets that they are used in."

"The currently growing refurbished market may take a hit, as major operators (like Verizon, Vodafone etc.), OEMs (like Apple) and major distributors have added full life-cycle services. Parts may become pricier which would impact the cost of repair and refurbishment services," Klaehne added.

Despite strong warnings from business groups and trade experts, US President Donald Trump on Thursday signed a memorandum that could impose tariffs on up to $60 billion of imports from China, in a unilateral move that triggered market selloff, Xinhua news agency reported.

According to CNN, the move comes following a seven-month investigation into the intellectual property theft, which has been a longstanding point of contention in US-China trade relations.