Lenovo Warns Of Price Rise Amid US Tariff Threat

Lenovo has issued a blunt warning about the defacto trade war between China and the United States.

The Chinese firm is the world’s largest PC maker, but it warned that it will have to raise product prices if US tariffs increase, Reuters reported.

The warning comes as some of the major economies in the world, including the UK and Germany, teeter on the brink of a recession.

Price rise

Lenovo issued the warning when it reported its forecast-beating quarterly results, where robust PC sales helped the company more than double its profit, Reuters reported.

Lenovo’s warning cast doubt on its sales outlook and depressed shares in the firm.

US President Donald Trump said this week that he would postpone imposing an additional 10 percent tariff on Chinese-made products including tablets and laptop computers until December, but would still impose the tariffs on desktops from September.

“Retail prices for products like PC and smartphones will increase if (US) tariffs increase,” Lenovo Chairman Yang Yuanqing was quoted as telling the earnings call.

And Yuanqing also reportedly said that moving manufacturing out of China so as to avoid US tariffs would also lead to product price increases.

But he did state that Lenovo’s global production footprint gives it flexibility in making adjustments, and it remains committed to China.

Reuters reported that the firm’s net profit rose to $162m in the quarter ended June, compared with an average estimate of $154 million by nine analysts.

Revenue from Lenovo’s personal computer and smart devices group grew 12 percent in the last quarter, but its mobile business group recorded a 9 percent fall in sales.

Earlier this year Lenovo and Qualcomm displayed what they called the first 5G laptop at the Computex conference in Taipei in May.