Tariffs and cell phones: Why it might be better to repair than replace

Why refurbishing cell phones might be the better option

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(ABC 6 News) – Cell phones and other electronics are already one of the most expensive things you can buy, and they may get even higher as a result of the ongoing trade war with China.

That potential increase has another industry becoming more viable by the day: cell phone repair.

David Anderson runs his own electronics repair shop out of shed in his backyard.

Among stacks of cd’s, instruments, and equipment he uses to write and record music in his spare time, Anderson also makes his living.

“I fix cell phones, tablets, some computers,” he says. “Even a model train motor someone need a soldering job on.”

Anderson’s efforts provide a cheaper option for many people who can’t afford the latest and greatest device, or even name brand parts.

“Instead of paying $200 or $250 for a part, I get a refurbished part that has maybe just a little display flaw,” he says. “That’s only $130 or something so right there you’re saving so much.”

Currently, electronic goods out of China are subject to a 20% tariff, a tax on imports paid by the company moving products into the U.S.

“When Apple brings an iPhone into the U.S. from China, they have to pay an additional 20% on whatever their cost was to import it into the country,” says Dr. Scott Hiller.

Hiller is an associate professor of economics at Fairfield University.

At that level, Hiller says companies like Apple or Samsung are more likely to eat the extra cost rather than pass it off to consumers.

Higher percentages, though, make that almost impossible to maintain profitability.

“I think this is why over the weekend that they decided they might back off on electronics,” Hiller says. “Electronics are our biggest import from China and they’re already quite expensive. A 145% tariff on them would really… we’d expect to see a dramatic increase in price there.”

Exactly how much the price would increase is hard to say, as the final numbers haven’t been decided.

Despite the weekend exemption, President Trump has said no one is getting off the hook that easily.

In an interview on ABC’s “This Week,” Commerce Secretary Howard Lutnick said sector-specific tariffs would be forthcoming on semiconductor products, saying they would likely come “in a month or two.”

As far as Anderson is concerned, however, the potential price increase provides an opportunity for people to think before tossing out their old phone.

“Whether (prices) go up or not it’s still a better option than to buy something new that’s costing a lot more,” he says. “Most repairs are going to be cheaper than a new phone.”