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U.S., China tariffs put uncertainty for county's tech department

Pierce County Information Services, the county government provider of technology services, has been facing budget uncertainties due to tariffs on Chinese goods. File photo

A 90-day trade battle truce between the United States and China has given some relief to Pierce County Information Services, the county government provider of technology services.

The department was facing a hazy future for some of its planned 2019 projects — server upgrades and new computers — due to President Donald Trump's tariffs on about $250 billion worth of Chinese goods increasing prices for the county's tech vendors. However, with few details on what the future negotiations could hold, and some form of price hikes still likely, the department will need to make decisions on how to approach higher than expected costs.

"It's still a big question mark on what is coming," said Janet Huppert, the county's information services manager. "Regardless we're going to be paying market prices."

If the prices raise too high, she said she would have to potentially scrap some of next year's planned projects, and instead do those of higher priority.

Across the various projects for Huppert's department, she said it is currently slated for a little over $100,000 — $69,00 of that is for server upgrades and $38,000 for laptops and desktops.

On Dec. 1, China and the U.S. brought their ongoing trade battle to a halt. At a meeting in Bueno Aires for the international Group of 20 meetings, Trump and President Xi Jinping agreed to attempt to find a trade agreement within 90 days before the planned tariffs would go into effect.

The agreement stalled Trump's Jan. 1, 2019 plan to raise 10 percent tariffs to 25 percent on over $200 billion worth of Chinese goods, while China agrees to purchase more U.S. goods.

The trade spat — which resulted in tariffs and, in some cases, higher priced goods — between the world's two largest economies started as a result of Trump's efforts to hit back at China for a large trade imbalance between the two countries, said Robert Kudrle, a professor specializing in international economics at the University of Minnesota - Twin Cities' Humphrey School of Public Affairs.

So far in 2018, the U.S. imported over $300 billion more worth in goods than it exported out to China, according to U.S. Census Bureau data. However, Kudrle said that's a minor issue compared to China's theft of U.S. intellectual property.

And while the G20 meeting could bring optimism on both the trade imbalance and IP theft issues, Kudrle said there was little indication from it that suggests how thing might transpire. It also does not affect the tariffs already in place.

"It hasn't changed the actual existing tariff situation, its simply delayed the exposition of potential tariffs," Kudrle said.

The Trump administration has targeted goods that are less likely to come down to the consumer, Kudrle said. Over time though, that difference could be harder to hide from consumers — meaning higher prices for county departments and consumers alike.

"The broader the amount of time, the more it will affect consumers," he said.

Vendors had contacted Huppert and told her that prices could raise due to the previously planned 25 percent tariff, and while the potential hike on prices is currently unknown due to Trump stalling the hike, there will almost certainly be increases, she said.

"[The trade truce] gives us three months to pre-order some things if we want to," Huppert said. "If the [vendors] prices go up, our prices go up."

Huppert planned to further discuss the tariff's effects at a 4 p.m. Dec. 4 information services committee meeting. The Herald's print publishing deadline is Tuesday morning every week.