Wednesday, May 25, 2022

The US lifting Chinese import tariffs might reduce the inflated prices of GPUs

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The US Trade Representative’s Office has reinstated 352 products to its exclusion list, which oversees Chinese imports subject to additional, punitive tariffs as part of the trade dispute between the US and China. Printed Circuit Boards (PCBs) are now once again exempt from the additional duties in the updated listing. Motherboards, GPUs, and a variety of other electrical components are all made with PCBs.

As a result of this move, PCBs imported from China are no longer subject to the higher import charges of 7.5 percent to 25 percent that went into effect in January 2021 when the rules exempting these products expired. In theory, this may result in cheaper prices for some of the greatest motherboards and graphics cards on the market. Of course, it is the best-case scenario, which presupposes that businesses will pass on the savings to customers.

However, motherboards are more prone to fail than graphics cards. The (still-normalizing) supply shock that followed the COVID-19 outbreak, as well as the present Russian invasion of Ukraine, have increased material costs for virtually all semiconductor goods. 
While this is also true for motherboards, demand for these products hasn’t exploded as much as demand for graphics cards, which have been targeted by scalpers and cryptocurrency miners. In the end, lower import tariffs may result in cheaper motherboards, or at the very least, help offset higher material costs.

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Graphics cards, on the other hand, are a different beast. Even as GPU prices continue to decrease towards MSRP, the demand shock has decimated that industry, which has been the case since the debut of Nvidia’s RTX 3000-series. While declining prices signal a gradual return to supply and stock normalcy, shops have stocked up on products that have already been marked up.

This could dampen the impact of tariff exemptions on end-user pricing, as retailers will be seeking to move graphics cards they bought at high and low prices at the same time. Retailers are likely to enhance margins on more current, lower-cost stock to compensate for the lower margins on GPUs they previously purchased at a big mark-up but can’t transfer due to plummeting consumer demand for inflated graphics cards. 

The final lesson is that effects on graphics card prices are more difficult to forecast, although it’s unlikely that decreased taxes would result in a price increase anytime soon.

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Also Read: Israeli researchers have managed to create the Country’s First Quantum Computer


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Nivedita Bangari
Nivedita Bangari
I am a software engineer by profession and technology is my love, learning and playing with new technologies is my passion.


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