President Donald Trump has implied that the US government might place a ten percent tariff on iPhones, Mac notebooks and other computers imported from China.
The announcement sent Apple shares down more than two percent in pre-market trading.
President Trump said in an interview with The Wall Street Journal yesterday that he expected to move ahead with boosting tariff levels on $200 billion of Chinese goods to 25 percent.
The president said tariffs could also be placed on Apple Inc. iPhones and laptop computers imported from China if the US decides to put tariffs on additional goods. Some of his aides had suggested those products might be exempted from additional tariffs. The administration has been worried about a consumer reaction should such items be subject to levies.
‘Maybe. Maybe. Depends on what the rate is,’ the president said, referring to mobile phones and laptops. ‘I mean, I can make it 10% and people could stand that very easily.’
Apple declined to comment on Mr. Trump’s remarks. In a September letter to US trade authorities, the iPhone maker said tariffs would disadvantage the company compared with foreign competitors and lead to higher US consumer prices.
Trump has said that companies like Apple that don’t want to be slapped with tariffs should “build factories in the United States and to make the product here.”
Some analysts like Wedbush’s Ives shook off Trump’s Apple tariff talk:
We note the $200 billion of Chinese goods/imports from China could be subject to a 25 percent tariff starting in January, however importantly Apple products with iPhones front and center that are produced from the flagship Foxconn factory in China were exempt from this initial tariff and not caught in this downdraft.
The Street will not be taking this news lightly as with the litany of bad news Apple (and its investors) have seen over the last month from the Cook iPhone metrics pull, softer data points out of Asia around XS/XR initial demand, and now this tariff threat on iPhones out of left field from Trump and Beltway will surely add to this white knuckle period for Apple.
Turmp is meeting with China’s leader Xi Jinping later this week and tariffs are on the agenda. Trump has so far said that it’s “highly unlikely” he would accept Beijing’s request to hold off on the increase unless the country opens up to competition from the United States.
To refresh your memory, back in the summer the Trump administration told the Cupertino tech giant that there would be no tariffs placed on iPhones. In September, the administration excluded Apple from a new round of tariffs at that time.
“Our concern with these tariffs is that the US will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for US consumers,” Apple said back then.
Could tariffs sting Apple where it hurts the most? Is Trump playing the iPhone card now because negotiations may be coming to a head? Is this more bark than bite from Trump?
Let us know by leaving a comment below.