Investing.com -- Proposed U.S. tariffs on imported PCs and components could cause significant price hikes, supply chain instability, and long-term shifts in manufacturing, according to Bank of America analysts. 

The bank says the new tariffs, which could range from 10-25%, are expected to have far-reaching consequences for PC makers like Dell (NYSE:DELL), HP (NYSE:HPQ), and Apple (NASDAQ:AAPL), as well as for consumers and businesses in the U.S.

They note that if the proposed tariffs are implemented, PC manufacturers will likely pass the costs onto buyers, potentially increasing PC prices by at least 10% in the U.S. or spreading smaller price increases globally. 

Acer (TW:2353) recently said the prices of its PCs in the U.S. will rise due to the tariffs.

“Businesses may delay upgrades, and lower price PCs could see an impact from more price sensitive customers. The price increases will likely offset margin pressure but could be demand destructive,” says BofA.

Despite efforts by some Original Equipment Manufacturers (OEMs) to shift production, China remains the dominant hub for PC assembly and components, notes the bank.

They explain that many companies rely on Taiwanese Original Design Manufacturers (ODMs) such as Quanta, Compal, Wistron, and Inventec, which still operate largely in China. 

Even if final assembly moves to other countries, many critical parts will still come from China, impacting overall costs, according to BofA.

To avoid tariffs, HP and Dell have expanded laptop production in Mexico and Thailand, while Apple has moved some MacBook production to Vietnam. 

“However, shiſting production is complex and costly, requiring years to scale up. The tariff landscape appears fluid, where there could be tariffs on Mexico over time that could create more supply chain complexity,” adds BofA.

While the industry is gradually decentralizing its supply chain to reduce geopolitical risks, BofA says this transition comes with higher costs and complexity. 

They note that in the short term, PC makers may stockpile inventory, lobby for tariff exemptions, or adjust product launches. However, given the PC industry’s slim profit margins, BofA believes absorbing tariff costs is not a sustainable option, making price increases inevitable.

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