Chief technology officers (CTOs) or anyone in charge of procuring equipment for their organizations must be on top of the recently imposed tariffs and brace for their impact. On April 2nd, President Trump announced reciprocal tariffs on many countries and a base 10% tariff on virtually all countries. Experts and analysts expect prices to increase immediately after the tariffs.
Much like other product categories, IT equipment is expected to experience the impact of tariffs by way of increases in listed pricing and perhaps even longer lead times, as OEMs adjust their supply chains to the new reality of trade tariffs globally.
For most enterprises looking to source hardware, the uncertain environment means bracing for price hikes and higher capital expenditures. However, at least for the moment, there are workarounds to ride out the situation and possibly even avoid any price increases altogether.
You could delay the purchases with strategic procurement and maintenance solutions that circumvent these additional tariffs.
So What’s Happening with Tariffs?
The long-promised tariffs are finally here and making quite a splash. The current administration in the US has imposed additional tariffs on a number of countries, including China, Vietnam, India, and Mexico. In the case of China, combined with the earlier tariffs, the new rate has come to 54%.
Other countries are considering responding by putting tariffs on the US. For instance, China has responded with 34% tariffs on US goods. It had already put limits on the export of key minerals and has recently introduced restrictions on rare earths.
Although the premise of these tariffs is to boost local manufacturing, the immediate impact may translate into higher prices for products that are imported into the US or have supply chains in other countries.
Will IT Equipment Be Impacted by Reciprocal Tariffs?
Electronics and IT equipment are also among products that will most likely feel the impact of increased tariffs, even in cases where there’s just the base 10% tariff. For many hardware products, the supply chains include countries like China, Vietnam, South Korea, and Taiwan, all of which have been hit by tariffs.
Take, for example, Cisco–the leading OEM for networking equipment. A quick glance at its list of suppliers shows many names from Taiwan. These suppliers either provide parts for the products or manufacture the equipment, which is then shipped into the US. With Taiwan now facing a tariff rate of 32%, it can be projected that the prices of Cisco equipment will increase.
Of course, these tariffs will impact new equipment, not what is currently in stock.
OEMs may also adjust their supply chains to offset some of the increased costs. Cisco, in particular, has already been doing that in the aftermath of steel and aluminum tariffs. The company’s CFO, Scott Herren, said:
“We’ve game-planned out several scenarios and steps we could take depending on what actually goes into effect, we’ll start to take those steps to mitigate the impact of the tariffs.”
But adjusting supply chains may not be that simple or straightforward, which means buyers may still feel the impact of rising prices, at least for the short term, before any mitigation strategies are realized from these OEMs.
How to Avoid Paying a Higher Price for IT Equipment?
Like it or not, the implication of the recent tariffs is higher prices of IT hardware. That means those servers, switches, routers, and computers that power your network may become more expensive.
For now, there are a few ways to avoid the price hikes:
- Extend the life of your current infrastructure with third-party support
- Act quickly and buy existing stock of new equipment that hasn’t been tariffed yet
- Buy certified, pre-owned equipment available locally
The first option is fairly straightforward. Simply stick with the existing equipment you have and ride out this current climate of uncertainty with the help of third-party maintenance. Where OEM support is no longer available, switch to a third-party to continue using the equipment reliably.
Although tariffs have gone into effect, any stock already in the country may be available at the pre-tariff list pricing. You can purchase this equipment now and refresh it before the stock lasts, and it becomes more expensive to refresh.
A more strategic option is refurbished hardware, which isn’t subject to the tariffs. Whether you’re refreshing or expanding, certified, pre-owned equipment may just be the cost-effective answer to avoiding price hikes in enterprise hardware as a result of tariffs.
Strategize and Take Action!
The situation with tariffs is still developing. However, immediate strategy adaptations are required to mitigate the financial impact. You can absorb the increasing costs or take strategic actions to offset or completely avoid them.
At PivIT, we’re well-positioned to help enterprises prevent, or at least reduce, the impact of tariffs on their IT equipment procurement. You can save significantly by purchasing refurbished equipment certified by the OEMs through PivIT. Similarly, you can tap the existing stock of fresh hardware with PivIT that’s already present in the country and doesn’t face tariffs.
Should you decide to wait out the wave and continue using your existing hardware, PivIT can also help with that via OneCall–the best third-party maintenance solution for equipment no longer under warranty or supported by the OEM.
Get in touch today to discuss your options!