Apple says Chinese tariffs will rise, AirPods

Proposed tariffs of up to 25 percent on specific products imported from China into the United States would affect "a wide range of Apple products," according to the company, including its Mac minicomputer, its chargers, adapters, specialized manufacturing machines and more.

"Pricing increases the cost of our operations in the United States, diverting our resources and putting Apple at a disadvantage to foreign competitors," Apple wrote when filing with the US Trade Representative. "More generally, tariffs will lead to higher consumer prices in the United States, lower overall economic growth in the United States, and other unforeseen economic consequences."

Apple declined to comment beyond its filed statement. The White House did not immediately respond to a request for comment.

Apple is among the most vulnerable US companies in the face of mounting trade tensions, business experts say. The company manufactures the vast majority of its products in China and exports them to the United States, which makes them potential tariff targets. There is also a significant activity in China that the Chinese could target in retaliation for US commercial actions.

"The first series of tariffs have been very difficult for supply chains," said Mary Lovely, an economist at Syracuse University. The Trump administration "has begun to hit things that are clearly untreated in the United States – consumer goods – and that will get people's attention."

The rates would impact some of the smallest contributors to Apple's total revenue. AirPods and Apple Watch are part of a product segment that generated revenue of $ 12.86 billion in the fiscal year ended September 2017, or 5.6% of Apple's total sales for $ 229.23 billion.

The iPhone, which accounts for about two-thirds of Apple's total sales, has not yet been affected by the proposed rates. However, that could change if the Trump administration followed the $ 500 billion threat of import levies, which would cover just about everything China exports to the United States, commercial experts say.

The CEO, Tim Cook, downplayed the pricing threat, telling analysts in late July that Apple had not been hit so far. He said Apple would provide public comments after evaluating the proposal.

Cook personally encouraged President Trump to avoid a major trade confrontation with China, telling the president in face-to-face meetings in late 2016 that it would negatively affect US companies, including Apple. .

Mr. Cook expressed his optimism that the trade situation between China and the United States would be "settled because there is reciprocity inescapable" between the two countries. "Every country can prosper only if the other does," he said at the summer conference with analysts. "And of course, the world needs the United States and China to prosper for the world to succeed."

The proposed tariffs follow the Trump administration's 25% tariff on $ 50 billion worth of goods from China, aimed at putting an end to what the White House has described as the theft of US intellectual property. American computers.

In its filing, Apple challenged this approach, writing that "it is difficult to see how the tariffs that harm American businesses and consumers will contribute to the achievement of the government's objectives with respect to Chinese technology policies."

The public comment period on the new rates ended on Thursday, the last step before a decision.

Apple has been among several technology companies to submit comments regarding the proposed rates. Intel Inc.,

Cisco Systems
Inc.

and others argued in their files that tariffs could hinder the US's competitiveness in 5G, an emerging wireless technology that the White House has developed as essential to national security.

Write to Tripp Mickle at [email protected] and Jay Greene at [email protected]