Tariffs and Your IT Budget

You’ve likely heard about the tariffs on goods from China in the news.  US consumers and business are already seeing the effects. The exact structure of these tariffs are complicated and will likely shift over time.

To summarize:

• Prices on some computer/server components (hard drives, RAM, etc.) have already gone up 5%-10% in 2018 due to tariffs, and the tariffs are expected to go up to 25% in 2019.
• Large portions of networking equipment (firewalls, switches, wireless access points) also received  5%-10% tariffs in 2018, and the tariffs are expected to go up to 25% in 2019.
• Pre-built PCs, servers, smartphones, wearables, and tablets are currently largely exempt from tariffs.
• Because of the tariff increases rising over time, the supply chain for equipment subject to tariffs is being stressed and it makes procuring equipment for non-enterprise sized clients more difficult.

What does this mean to your businesses?

• Your next IT project involving purchasing physical servers with upgrades and/or network equipment will be more expensive because of these tariffs.  It also may take longer to procure these items due to current high demand before the tariffs increase to their maximum percentage.
• Your largest IT hardware expenses are likely workstation & server refreshes.  The pre-built portion of those will be unaffected. However, adding RAM and/or redundant hard drives is subject to these tariffs.

What can you do?

• Make sure your IT equipment has an extended warranty so that you experience the full lifecycle of the equipment with the least risk. This will help minimize the frequently of purchasing equipment subject to tariffs and remove the burden of purchasing individual replacement parts. I.e., replacement cost of a bad hard drive covered by the warranty shifts the tariff burden to the manufacturer while it’s under warranty.
• If your refresh cycle is affected by the tariffs, the cost of doing business has unfortunately increased in the US due to the political climate. Expect to budget more for network equipment and components such as hard drives and memory upgrades.

Our goal at PK Tech is to help our clients make technology decisions that protect and benefit their business. Feel free to call us at (602) 639-9900 or email hello@mypktech.com and we’ll be happy to answer your questions.