The United States and China recently announced a potential trade deal that will reduce Chinese tariffs on a variety of high-tech items. Positioned as a boon for foreign manufacturers with facilities in China, this trade deal would impact more than US$1 trillion in annual trade between the two countries, according to the US government.

Of most interest to manufacturers and buyers of mobile electronics are that multicomponent semiconductor components will have their 25 percent tariff removed. This means that products like SoCs and other semi-finished components will no longer have that 25 percent cost premium attached to them sent to China for final assembly. China had these tariffs for a long time, perceived by many as a way to help create and protect their then-nascent semiconductor industry.

More importantly, the agreement between China and the US is just one of the trade agreements in this area – additional agreements are being negotiated with South Korea, Japan and other nations. All of this may mean that companies like Apple, Samsung, Sony and others may be able to produce finished products in China more cheaply. In addition, smaller manufacturers may be able to enhance their price competitiveness at the low end.

While the new treaty has not been formally ratified by either country, and would have to be approved by the World Trade Organization (WTO) in order to become a law, it would represent a boon for smartphone, tablet, and wearable manufacturers in China. It may also mean that more investment would come back to China. This includes Samsung's recent investments in Vietnam, an investment that in the past may have gone to its traditional manufacturing base in China.