How the world's biggest vendors are planning for Trump's 25 per cent tariffs
Laptops, notebooks and PCs could be next in line as US president continues trade war with China
President Trump whipped up a storm across the tech industry last year when he announced that certain goods imported into the US from China would be hit with tariffs of 10 per cent.
A host of vendors bumped up their prices in response, but the impact of the taxes was still very much unknown. What we do know is that vendors producing components, routers and networking gear were hit hardest.
Before the industry had a chance to settle, Trump struck again, bumping up the tariffs to 25 per cent and then threatening to bring PCs, notebooks and other products into the fray.
The US Trade Representative Office will begin a public hearing on Monday to decide which products, if any, will be hit with further charges. In a bid to prevent this from happening, over 600 US companies, including Walmart and Target, sent a letter to Trump yesterday pleading with him to abandon the hikes.
Since the president announced the latest increases, a number of the world's largest tech companies have published quarterly numbers and discussed their plans to mitigate the risk of the new tariffs on earnings calls.
We've rounded up the key takeaways from each vendor that has spoken since the rise to 25 per cent was announced last month.
Cisco
Cisco has soldiered on largely unaffected by the geopolitical turmoil threatening to damage the tech industry over recent months, continuing its mini renaissance under CEO Chuck Robbins (pictured).
But even the networking giant has been forced to adapt to the escalating trade war, with Robbins revealing on an earnings call last month that Cisco has minimised the amount of manufacturing it carries out in China.
The chief executive was speaking one week after Trump revealed he would be hiking tariffs on certain goods produced in China from 10 per cent to 25 per cent.
He said that Cisco quickly implemented a contingency plan that had been put in place a few months earlier. As a result, he said that Cisco expects to see "very minimal impact" from the increases.
"If you remember back many months ago when the 10 per cent tariffs were announced, we said we had basically three phases to our strategy," Robbins explained. "The first was we would continue the dialogue with the administration to make sure they understand the impact.
"The second was, we'll continue to do what we've always done which is optimise our supply chain, which we've been doing for the last 20 years.
"And then the third was, we will make pricing adjustments where necessary if needed. The team has been working incredibly hard over the last six months.
"And so last week when we saw the indication that the tariffs were going to move to 25 per cent on Friday morning, the teams kicked in and we actually have executed completely on everything that we need to do to deal with the tariffs."
Click through to the next page to see how Dell is preparing for the increases
How the world's biggest vendors are planning for Trump's 25 per cent tariffs
Laptops, notebooks and PCs could be next in line as US president continues trade war with China
Dell
Dell surprised many when it announced its quarterly results at the end of May, with its server business declining for the first time in 10 quarters.
The vendor highlighted softness in its Chinese business as a contributing factor, with CFO Thomas Sweet (pictured) claiming that tensions between the US and China are "overhanging" the market, but adding that he doesn't believe they had a significant impact on the quarter.
Sweet stressed that struggles in China are not purely down to the
trade war, claiming that Dell has seen "very competitive pricing or some pricing on some of these large deals that didn't make sense to us" in the region.
He added that Dell is "well positioned" for continued trading under the new higher tariffs.
Dell also has plans in place for potential tariffs on different products, including notebooks and monitors.
Sweet claimed that Dell is aided in the battle against tariffs by its strong direct model.
"Our direct model and associated lower inventory position provides flexibility relative to our competitors," he said.
"We will continue to be disciplined on pricing as we move through the year, but we will also ensure that we adjust as appropriate given market and competitive dynamics."
Click through to read how HP CEO Dion Weisler is preparing for potential tariffs on the PCs
How the world's biggest vendors are planning for Trump's 25 per cent tariffs
Laptops, notebooks and PCs could be next in line as US president continues trade war with China
HP Inc
The impact of the trade war on HP Inc could escalate if the latest list of products is activated by the US government.
The fourth list of affected goods - if activated - is likely to include PCs, laptops and monitors, as well as other devices including smartphones.
On an earnings call in May, CEO Dion Weisler (pictured) said that HP has "a highly experienced team and the know-how to navigate through complex market conditions".
Weisler however indicated that the implementation of further tariffs could have a significant impact on the short-term future of the tech industry.
"We're working with our supply chain on mitigations to ensure the best outcome for our ecosystem of customers and partners as well as our shareholders," he said.
"So clearly, the implementation of incremental tariffs on the complete list of products imported from China would have industry-wide impacts; the impact would likely be more felt in the near term."
Weisler was however reluctant to offer guidance on how the tariffs may affect HP and the wider market as it is not known if and when the latest list will be implemented.
Click through to read how tariffs on smartphone, and retaliation tariffs from China, could impact Apple's iPhone sales
How the world's biggest vendors are planning for Trump's 25 per cent tariffs
Laptops, notebooks and PCs could be next in line as US president continues trade war with China
Apple
The trade war was not mentioned on Apple's most recent earnings call, although this is likely because it took place before the US government revealed that notebooks and computers could be in line for tariffs of up to 25 per cent.
However, Apple's issue could extend beyond Trump's hikes, with China
reportedly threatening to impose its own tariffs on products sold in China by US companies - including the iPhone.
Apple's smartphone is already struggling in China, but Apple CEO Tim Cook (pictured) said in an interview at the start of the month that he is optimistic China will not respond in such a way.
"The Chinese have not targeted Apple at all, and I don't anticipate that happening, to be honest," he said in an interview with CBS News.
"I'm hoping that doesn't happen. The truth is, the iPhone is made everywhere. And so a tariff on the iPhone would hurt all those countries."
Foxconn, one of Apple's largest manufacturers, also said that it has the capacity to make iPhones for the US market outside of China, to avoid the tariffs altogether.
Click through to read how tariff hype has slowed down sales cycles for HPE
How the world's biggest vendors are planning for Trump's 25 per cent tariffs
Laptops, notebooks and PCs could be next in line as US president continues trade war with China
HPE
Hewlett Packard Enterprise (HPE) CEO Antonio Neri said that the trade war had affected business in the vendor's Q2, with sales in China softening and sales cycles lengthening.
"As people assess what's going on here in North America, particularly with global trade, we saw these elongated cycles in decision making," he said.
"That had an impact on a few deals that shifted from Q2 to Q3 and so that come all together in a way that drove that decline in North America."
HPE did not go into detail on how it has tweaked its manufacturing, but said it is "taking actions to mitigate the risks of the recent tariff increase from 10 per cent to 25 per cent, and have factored that into our outlook".
"We did witness some shifts in market dynamics, with global trade often mentioned as a concern by our customers," Neri added.
The vendor's situation in the Chinese market is more complex than others' because of its New H3C joint venture with UNIS.
HPE owns a 49 per cent stake in the venture, and said it is "working to balance the right mix of HP products with H3C local offerings to optimise profitable growth for the overall entity".
Click through to read how Trump's feud with Huawei could impact Tech Data's European operation
How the world's biggest vendors are planning for Trump's 25 per cent tariffs
Laptops, notebooks and PCs could be next in line as US president continues trade war with China
Tech Data
Tech Data endured a troubled Q1 in Europe, where sales declined eight per cent year on year to $4.3bn (£3.4bn).
CEO Rich Hume said that the state of the distributor's future depends partly on how vendors respond to tariff increases.
He explained that, ultimately, the impact is dictated by vendors.
"Generally this is something where the tip of the arrow, if you will,
is our vendors," he said. "Vendors usually have the responsibility of landing the product in local jurisdiction and then we acquire from there.
"If vendors decide that they have to consider taking price increases associated with incurred incremental costs, then as they raise their prices as a generalisation we do an evaluation and typically we follow those price increases simultaneously.
"So from an overall tariff perspective as we had seen with round one etc, our business is fairly seamless in being able to manage that.
"And as it goes from potentially 10 per cent to 25 per cent, etc, I think our judgment would be that if there were an impact, that would be the overall macro-level economy slowing down, as opposed to any transactional exposures that we might have in our business."
An added dynamic for Tech Data is that it is a distributor of Huawei smartphones in Europe. Huawei has been the subject of various restrictions from the US government, with many believing it has become collateral damage in the trade war.
The latest bans US firms from trading with Huawei and selling its products.
"We could be exposed with the inventory that we carry," Hume said.
"We do have inventory and we will follow the laws of the US, and as they ebb and flow and determine where they want to go with that in the future, we certainly will comply.
"At the same time, we have a responsibility to respect our vendor relationships and we certainly are doing that as well."