Apple warns that Trump China tariffs will mean higher prices

Trump signals escalation of trade war with China, says he has tariffs ready on another $267-billion of imports
Donald Trump: U.S. could move "very soon" to hit China with $200B in new tariffs
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09 September, 2018

All Apple had to do to avoid import taxes was to rebuild all of its manufacturing in the U.S. "Start building new plants now", he tweeted.

Trump's now threatened tariffs on a total of 517 billion dollars in Chinese imports - a figure that eclipses the total amount of goods imported from China to the US previous year.

In its letter, Apple argued that the way US trade officials calculate the USA trade balance - attributing the entire value of a product to a country like China where final assembly happens - fails to reflect the true value that Apple generates in the United States. For gadget nerds, this seems like a sad and obvious conclusion to the spate of escalating tariffs that the United States and China have been slinging back and forth since Trump got all this started back in autumn.

The public had until Thursday to comment on the administration's plan.

AirPods headphones, some of Apple's Beats headphones and its new HomePod smart speaker also face levies as part of the proposed tariffs on $200 billion worth of Chinese goods, according to the letter submitted on Wednesday.

"More broadly, tariffs will lead to higher USA consumer prices, lower overall US economic growth, and other unintended economic consequences".

Apple CEO Tim Cook has previously voiced optimism that Trump's trade measures would not impact the price of the iPhone, which drives the majority of the company's profits.

Apple continued that the tariff list "covers a wide range of Apple products and the products used in our US operations".

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Intel Corp., the world's second-largest chip maker, weighed in supporting Apple's opposition to the tariffs and broadening the argument.

Chinese exports to the United States rose to US$44.4 billion in August, a 13.2 per cent increase from the same period a year ago, according to customs data.

Computer and phone makers are involved in a global supply chain that includes Chinese manufacturing, and that can not be easily excluded without harm to United States companies, Intel said in a letter to the trade representative. The Trump administration has also called on China to allow US companies greater access to Chinese markets and to cut its USA trade surplus.

If the US President goes through with his threat, it would substantially escalate his trade war with Beijing, especially since China has itself said it could retaliate, including taking action on US companies operating in its territory.

"We are puzzled as to why the Administration may be using tariffs in part to re-engineer global ICT (information, communication and technology) supply chains that have served USA companies so well".

Apple did not disclose specific revenues for most of the affected products, but of those the Apple Watch may be the biggest seller.

"The burden of the proposed tariffs will fall much more heavily on the United States than on China", Apple said in its letter. Earlier this year, the company said that as part of tax reform it would spend $350 billion in the U.S. over the next five years. The iPhone is Apple's primary revenue driver.


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