INTERNATIONAL - China’s Lenovo Group warned it will have to raise product prices if US tariffs increase, sending its shares tumbling 6.5 percent to two-month lows.
Lenovo’s warning amid mounting business uncertainty due to the US-China trade war cast doubt on its sales outlook and took the shine off forecast-beating quarterly results where robust PC sales helped the company more than double its profit.
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 told an earnings call on Thursday.
He also said shifting manufacturing from China to avoid US tariffs would also lead to product price increases, although Lenovo’s global production footprint gives it flexibility in making adjustments, and it remains committed to China.