Duties on electronic parts to hit small tech companies

The United States import tariffs came into effect on $34 billion of Chinese goods on Friday, including electronic parts, creating challenges for technology manufacturers in the US.

Industry insiders said startups could be at a particular disadvantage compared to their larger, globalized rivals to absorb or avoid the 25 percent cost increase for imported electronic components.

Chibitronics, a tech education startup with a warehouse in New Jersey, makes videos and educational tools to help children learn about robotics. It is one of the small tech companies in the US that could suffer as trade barriers go up.

The company is waiting for a container of children's learning kits to arrive from China. The goods - categorized as electronic parts - will be subject to tariffs, along with water pumps, industrial robots and electric cars.

"The goods are slated primarily for educators and makers that are stocking up for the fall semester," Chibitronics Co-Founder Bunnie Huang wrote in his blog. "It will arrive in the US the second week of July, and will likely be greeted by a heavy import tax."

"Big companies with the resources to organize thousands of overseas workers making TVs and cellphones will have their outsourced supply chains protected, but small companies that still assemble valuable goods from basic parts inside the US are about to see significant cost increases," Huang said.

"Startups fear tariffs will put them at a disadvantage relative to their global competitors, because companies in other nations will be able to undercut them in the market by continuing to import critical components from China," Steve Koenig, senior director of market research at the US Consumer Technology Association, said on Thursday.

"And the economic uncertainty of future tariffs could prevent some startups from ever going to market and launching their products."

"Tariffs are bad for everyone, but they especially hurt small businesses even more. Four out of five CTA small businesses say they either cannot switch their sourcing from China to another country or cannot do so without a costly disruption to their business," Koenig said. "Of our members that may potentially switch sourcing, the majority find it economically or otherwise impractical to consider shifts to the US."

Moog Music, a North Carolina-based manufacturer of synthesizers and other electronic instruments, with about 100 employees, warned customers about the potential effects of the tariffs in an email. The company said the US tariffs on Chinese goods "will immediately and drastically increase the cost of building our instruments" and could lead to layoffs or offshoring of manufacturing.