Here, Jae Ro, Marketing Manager at SIGNAL + POWER, examines how tariffs, compliance costs, and supply constraints are changing the true cost of sourcing electrical components.
The changing cost of electrical components
New US tariffs are adding cost and uncertainty to electrical component sourcing, making it harder for manufacturers to judge suppliers on unit price alone. Tariffs of 10% or 12.5% took effect on 24th July on imports from 60 trading partners, while freight costs, minimum order quantities, certification requirements, lead times, and product availability continue to shape purchasing decisions across the electronics supply chain.
These tariffs were imposed under Section 301 of the Trade Act of 1974, targeting trading partners that have failed to prohibit imports made with forced labour. They replaced a flat 10% Section 122 surcharge that expired the same day, so for many importers the rate movement is modest.
The reason the legal basis for tariffs keeps shifting is that tariff authority belongs to Congress, and a President may only use powers Congress has delegated by statute. In February, the US Supreme Court held in Learning Resources, Inc. v. Trump that one of those statutes, the International Emergency Economic Powers Act, does not confer tariff authority at all. That removed the fastest method available to the administration, leaving only authorities that carry investigations, conditions, or expiration dates.
Because this action targets forced labour, a country’s rate follows its labour-import law rather than its trade balance. Nineteen economies with forced-labour import prohibitions pay 10%, including Canada, Mexico, and the United Kingdom. Forty-one without them pay 12.5%, including China and Vietnam.
For manufacturers sourcing power cords, plugs, adapters, and other electrical components, the result is that the cheapest quoted part can become the more expensive option once the full cost of getting it into production is considered.
What the exemptions cover and what they missed
The new tariffs that took effect came with a substantial exclusion list. Finished electronics were largely excluded: computers, servers, telecommunications equipment, smartphones, display modules, integrated circuits, and semiconductor manufacturing equipment.
However, foundational components were treated differently. Cord sets, plugs and sockets, printed circuits, and passive components do not appear on it. The categories left off the exemption list are not small. US imports of insulated wire and cord sets ran roughly $36.9 billion in 2025, electrical converters and power units $35.4 billion and plugs, sockets and connectors $15.6 billion, totalling roughly $88 billion.
The Global Electronics Association acknowledged the exemptions granted but also stated that “American electronics manufacturers import printed circuits, passive components, connectors, and power conversion parts because domestic capacity for them does not yet exist at scale, and qualification cycles for automotive, aerospace, medical, and defence-grade electronics run 18 to 36 months.”
This leaves a gap between finished goods and the components inside them. A completed server can enter without a forced-labour duty while the printed circuits and passive components inside it cannot.
When unit price does not reflect landed cost
A supplier quote can look competitive at first, but that can change once tariffs, freight, and minimum order quantities are factored into the landed cost calculation.
Many electrical components have historically entered the US at free or near-zero most favoured nation rates, meaning new tariffs can introduce a cost that manufacturers were not previously carrying.
Legacy duties compound the effect. A cord set of Chinese origin still carries the 25% List 3 duty from the separate Section 301 action against China imposed in 2019, and because copper cord sets fall under Section 232, a further 25% applies on copper articles in place of the force-labour duty. Together with the 2.6% base rate, a Chinese cord can land at 52.6%. Goods qualifying under USMCA are excluded from the forced-labour duty entirely, which makes rules of origin even more important.
High minimum order quantities can add additional costs as well. Buying larger volumes may help manufacturers protect against shortages and obtain lower unit costs, but it also ties up working capital and increases storage requirements.
For procurement teams, the comparison needs to move beyond the quoted unit price and focus on what it actually costs to source, ship and hold the component until it reaches production.
Why switching suppliers can create new costs
Higher tariffs may make an alternative supplier look more attractive, but switching sources can introduce new costs and operational problems, especially when domestic options are limited.
Printed circuit board manufacturing in the US has fallen from roughly 30% of global production in 2000 to about 4% today, while about 90% of production is located in Asia. This limits the manufacturer’s ability to simply move to a domestic supplier when tariffs or shortages affect an existing source.
Even when another supplier is available, manufacturing productivity rises over time and varies from plant to plant, so a new supplier or facility rarely matches the output and consistency of the one it replaces from the outset. When Apple shifted iPhone casing production to a new plant in India as part of its effort to reduce dependence on Chinese manufacturing, the Financial Times reported that only about one in two components coming off the line was in good enough shape to send forward to assembly. Intel encountered the same pattern decades earlier, finding that a new fab could take roughly a year to reach the yields of the line it was copying.
This can make switching suppliers more expensive than it first appears, particularly when additional testing, approval or redesign work is needed before production can continue. These are largely one-time costs, and a sustained tariff difference can outweigh them. But they are easy to underestimate.
How supply delays change the calculation
Lead times and product availability can have just as much influence on sourcing costs as tariffs, as an inexpensive component still creates a problem if it is not available when production needs it. Lead times for high-capacitance ceramic capacitors, for example, already exceed 20 weeks, which can force manufacturers to order earlier, hold more inventory, or search for an alternative source.
A single assembled board can contain hundreds of individual parts, many costing only a few cents, but one unavailable component can prevent the whole board from being completed and delay wider production.
For procurement teams, this shows why continuity of supply needs to be considered alongside price, because a lower-cost component can quickly become the more expensive option if a shortage delays production.
A more uneven supply market
Tariff pressure is arriving at a time when demand remains strong across several electronics markets. The ECIA Industry Pulse sales sentiment index, on which 100 separates expected growth from contraction, reached a five-year high of 154.1 in June before falling 12.5 points to 141.6 in July. Sentiment remains clearly positive with some summer softening.
AI and data centre growth are also increasing demand for processors, memory and supporting electronic components, while extended lead times remain an issue in parts of the wider electrical supply chain. For manufacturers, this means identifying which components are most exposed to long lead times, concentrated supply or limited alternatives, and planning purchasing accordingly.
Why electrical components are becoming a sourcing priority
Electrical components may represent a relatively small share of the value of a finished product, but their effect on production can be far greater than their individual price suggests. A power cord, plug, adapter, capacitor, resistor, or other part can hold up production if it becomes unavailable, more expensive under new tariffs or difficult to replace because of certification requirements.
This is pushing electrical components higher up the sourcing agenda, particularly for the categories the exemptions did not reach.
Manufacturers are also reassessing just-in-time purchasing, with more attention being given to supplier diversification and flexible inventory planning. Where a component is difficult to replace, approving another supplier in advance or holding additional stock may be more economical than responding after a shortage has already disrupted production.
Looking beyond the quoted price
The latest US tariffs are changing the economics of electrical component sourcing by adding cost to a market already shaped by freight, certification, limited supplier choice, and uneven availability. A component that appears inexpensive on a quote can become considerably more expensive once those wider sourcing requirements are taken into account.
Exemptions are granted by ten-digit HTS code rather than by product category, so two similar parts can be treated differently. That alone makes unit price an unreliable guide.
Manufacturers therefore need to judge electrical components by total cost, compliance and continuity of supply rather than unit price alone. Taking those three factors together gives procurement teams a clearer view of the real cost of a component and helps reduce the risk of a low-cost part becoming an expensive production problem.
