Trump's tariffs will widen the digital divide

As President Donald Trump's tariff turmoil continues, it is becoming increasingly obvious that this unpredictability in the United States will put economic pressure on American businesses and residents. But, like other types of business turmoil, those suffering from lower incomes will be most affected.

Trump’s tariffs on U.S. imports offer some exceptions to smartphones and small electronic devices, but experts say the prices of these devices will still rise because the companies that produce them will increase the cost of the entire supply chain as the trade war continues to escalate.

And, while many buyers who buy premium devices may be able to pay an additional $100 or $200 for phones or laptops that have been sold for over $1,000, those who buy low-priced personal technology will feel even more squeezed.

“The challenge is that people who buy low-priced products are often the most price-sensitive and the most hurt,” said Shawn Dubravac, chief economist at the Electronic Trading Association IPC. “Usually, low-priced products have smaller profit margins, which is true in almost all categories.”

Cheap cars, entry-level smartphones, budget laptops and tablets have less profit per unit than their premium model counterparts. This means that unlike flagship phones and laptops or high-end gaming PCs, companies need to sell more cheap devices to make the efforts to build them pay off. If the additional cost of tariffs increases makes people buy less, it means the logic of selling them in the United States is not very meaningful.

“The logic is very simple: low-priced products are more intense at prices, which squeezes profits,” Dublavak said. “At the same time, they are often produced at higher volumes, and business models often rely on scale to make up for thin edges.”

The president walks back and forth, which equipment will be tax-free. Regardless of how Trump’s tariffs ultimately work, his estimates of him, or enabling companies to make their own way out efforts, anyway, all uncertainties could lead to greater inflation across the economy. Things that get more expensive can get more expensive.

In this economy, inflation is nearly impossible to end, said Anshel SAG, chief analyst at Moor Insights & Strategy.

“My biggest fear is that because this will drive inflation up, these policies will cause people to run out of one-time income and consumption to a large extent,” SAG said. “Even if many of these things are eliminated and a deal is reached, it will still lead to higher inflation and lower consumer purchasing power.”

Of course, rising consumer technology costs are not the only force that contributes to the economic vulnerability of the poor. Trump has also set more budget cuts that will overhaul the low-income population and allocate federal housing programs. In April, the government cleared thousands of employees of the U.S. Department of Health and Human Services, including all employees of the Energy Assistance Program for Low-income Homes, which literally provided lighting for certain low-income households. Since January, thousands of layoffs in Social Security, Veterans Affairs and the U.S. Agency for International Development have delayed the health, well-being and purchasing power of those without these services.