The US consumer technology industry is poised to reach new heights in 2025, with projected spending of $537 billion, according to a forecast by the Consumer Technology Association (CTA). This represents a 3.2% growth over 2024, driven by increasing demand for new apps, devices, and gadgets. However, the CTA warns that President Trump's proposed tariff plans could significantly dampen this growth, leading to a decline in US purchasing power.

Brian Comiskey, the CTA's futurist, sounded the alarm at the Consumer Electronics Show in Las Vegas, stating that tariffs on technology products could result in a $90-$143 billion decline in US purchasing power. This would be a significant blow to the industry, which is otherwise expected to experience a "super cycle" of spending driven by consumer demand for new AI-powered features.

The CTA's report, released in October, analyzed the potential impact of two tariff proposals: a 10% or 20% tariff on all imports from all countries, and a 60% tariff on all imports from China. The report found that these proposals could increase prices on laptops and tablets by 46%, video game consoles by 40%, and smartphones by 26%. Comiskey added that spending on these categories could decline by as much as 68%, 58%, and 37%, respectively, if the tariffs are implemented.

Despite the potential threat of tariffs, the consumer tech industry is expected to continue growing, driven by consumer demand for AI-powered features. The CTA's research indicates that consumers are eager to adopt new technologies, such as Apple Intelligence and Microsoft Copilot+, which are only available on the latest devices. Additionally, AI is enhancing traditional consumer tech categories, such as fitness trackers, smart TVs, and parent tech, making them more appealing to consumers.

Another factor contributing to the projected growth is the increasing purchasing power of Gen Z, who are expected to make up 27% of the global workforce by 2025. This generation is known for its love of new technology and enthusiasm for being early adopters, which is likely to drive demand for the latest gadgets and devices.

In conclusion, while the consumer tech industry is poised for a record-breaking year, the threat of tariffs looms large. The CTA's forecast serves as a warning to policymakers to consider the potential impact of their decisions on the industry and consumers. As the industry continues to evolve, it will be important to monitor the effects of tariffs and other factors on consumer spending habits and the overall growth of the industry.