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Impacts of New Tariffs on Product Pricing and Availability

Recent tariff announcements have triggered significant changes in pricing and availability for customers in the United States. With a new 32% import tariff on goods manufactured in Taiwan, the manufacturer is compelled to adjust its pricing strategy for several products. Despite temporarily absorbing a portion of this cost, prices for in-stock laptops and new system pre-orders will increase by approximately 10% for US consumers. Sales of the lowest-priced models, for which absorbing tariff costs is infeasible, are currently paused in the US market. Additionally, the pre-order launch of the Framework Laptop 12 is being postponed in the US.

The company recognizes that these developments are challenging for both customers and itself, acknowledging the obstacles in its mission to revolutionize consumer electronics. This situation is not unprecedented; the manufacturer has previously navigated similar hurdles and fully intends to remain transparent and proactive in communicating updates as this situation unfolds.

Details on Pricing Adjustments

As the majority of Framework Laptops, Mainboards, Framework Desktops, and selected modules are produced in Taiwan, they are subject to the new 32% import tariff. Consequently, these specific products will see a price increase of 10% within the United States, with potential future increases if tariff rates remain high. Other modules, primarily manufactured in China, face even steeper tariffs ranging from 104% to 129%. For these items, the company is also absorbing some of the tariff costs, though they will reflect price adjustments depending on the product category. Additionally, storage components sourced from Western Digital in Malaysia are now subject to a 24% tariff, leading to a price hike of up to 10%. Customers are advised to consider purchasing storage directly from Western Digital for their DIY editions to avoid the increased costs.

These pricing changes are effective immediately for US customers, impacting both existing stock and new pre-orders. The strategy of absorbing part of the tariff while increasing prices serves as a temporary measure while further monitoring tariff developments. Should tariffs be lifted, unfulfilled pre-orders may revert to their original pricing. Conversely, if tariffs escalate, further price adjustments may be necessary.

Pre-order Management and Future Plans

For customers with existing US pre-orders for products like the Framework Laptop 13 and Framework Desktop, the company is still assessing how to address the impact of tariffs. Customers may need to confirm any price modifications prior to finalizing these pre-orders. To facilitate this, the capability to modify existing US pre-orders has been temporarily disabled, although buyers can still make changes at the point of order finalization. Importantly, all pre-orders continue to be fully refundable. Updates on the timing for pre-orders of the Framework Laptop 12 will follow, with some manufacturing capacity reserved for US orders to align with international shipments.

Operational Aspects of Tariff Implementation

Understanding how tariffs work is essential for comprehending these changes. Tariffs are based on the product’s country of origin and its classification under the Harmonized Tariff Schedule (HTS) code. All products are shipped DDP (Delivered Duty Paid), meaning the manufacturer handles tariffs during customs clearance, incorporating these costs into product pricing. Particularly for electronics, the country of origin is defined by where substantial transformation occurs, which, for computers, refers to where the main circuit board is assembled.

When the company was established five years ago, it anticipated potential trade challenges between the US and China, prompting the choice of a manufacturing base primarily in Taiwan. Despite benefits from this strategy in earlier tariff rounds, recent tariff changes have impacted all regions involved in the electronics supply chain. The manufacturer is actively exploring opportunities to relocate Mainboard assembly to the US, yet current manufacturing partners lack the necessary infrastructure. Efforts to shift some module production from China to countries with lower tariffs, such as Thailand and Indonesia, are ongoing, although implementing new manufacturing infrastructures is a long-term endeavor that cannot be expedited in light of the recent tariff increases.

Throughout this period of adjustment, the company remains committed to delivering quality products and ensuring customer satisfaction. The robust Supply Chain and Logistics teams are actively exploring all possible avenues to restore normalcy in US fulfillment. The company will continue to communicate openly about any developments and solutions that arise from this situation, ensuring that consumers are kept in the loop as they navigate this challenge together.

Source
www.theverge.com