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The Trump Administration has followed through on the President's commitment to impose a new $ 200 billion tariff on goods manufactured in China, but a leading company that opposed it has been exonerated: Apple.
The US government has released a definitive list of products that will be affected by the new tariffs. Products missing from the list include Apple and AirPod watches, as well as smart watches and fitness trackers manufactured by other companies such as Fitbit. Exemptions were reported for the first time Monday by Bloomberg.
Earlier this month, Apple sent the Trump administration a letter warning that pricing could result in higher prices for Apple products, including the watch, AirPods, the HomePod, and some accessories. Apple did not say that the iPhone, its best-selling product, would be affected.
"As all tariffs turn out to be a tax on US consumers, they will increase the cost of Apple products that our customers now rely on," said the letter from Apple. Trump responded with a tweet urging Apple to build more manufacturing plants in the United States.
Prior to this exchange, Trump and Apple CEO Tim Cook had dinner at Trump Golf Club in Bedminster, NJ, to discuss the impact that rates would have on Apple parts purchased in China. Cook also went to the White House in May to discuss his concerns, when administration officials allegedly assured him that the new rates would not affect the iPhone.
The new 10% tariffs add to the $ 50 billion worth of Chinese goods subject to customs duties imposed earlier this year. They will come into effect on 24 September and reach 25 per cent by the end of 2018. Nearly half of China's imports to the United States will be subject to tariffs. The White House says it is ready to impose tariffs on an additional $ 267 billion in Chinese imports if China retaliates.
"I hope this business situation will ultimately be resolved by myself and Chinese President Xi, for whom I have a lot of respect and affection," said Trump in a statement.
Apple's stock closed Monday down 2.7% to 217.88 dollars per share. Fitbit closed down 1.1% to 5.45 dollars per share. Trade tensions weighed on the stock market before the announcement of prices, with the S & P 500 index falling 0.6% to 2888.80 on Monday.
Even though the iPhone, Apple Watch and other products are not subject to US tariffs, Apple remains vulnerable to trade tensions between the two countries. An analyst at Moor Insights & Strategy told The Wall Street Journal that China's retaliatory measures "could be quite devastating" in the long run if China restricts parts sales to US companies.
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