US bonds save Apple gadgets but hit the cloud industry

(Reuters) – According to a list of products released Monday by US Trade Representative (USTR), the United States will spare Apple Watch and other consumer gadgets from the latest tariffs on Chinese products.

However, some parts of the computer servers and network equipment that feed cloud-based data centers and Internet-based services are now facing a tax, as are some parts of the machines used to make semiconductors.

US President Donald Trump intensified on Monday his trade war with China, imposing 10% tariff on Chinese imports of about $ 200 billion and warning that if China takes retaliatory measures of tariffs on about $ 267 billion in additional imports. "

The administration's proposal sparked protests from tech companies earlier this year, but the USTR's final list of taxed devices avoids many consumer names and products.

The iPhone was not part of the "broad range" of products that Apple said the regulators would be affected by the $ 200 billion price series in a September 5 comment letter to business managers. Apple feared for its Apple Watch and AirPods wireless headphones, but both were excluded from the list announced Monday.

The new rate series will come into effect on September 24 at 10% and will reach 25% on January 1, 2019.

However, if Trump expands its tariffs to an additional $ 267 billion, almost all Chinese imports would be affected, including the iPhone, as well as all other smartphones. Apple shares fell 0.7 percent to $ 216.29 after hours.

Shares of Chinese and Taiwanese suppliers of Apple dropped Tuesday morning in Asia. Foxconn, a Taiwanese manufacturer known as Hon Hai Precision Industry Co, lost 2%, while Pegatron Corp. assembler lost 2.4%. Photographic lens manufacturer Largan Precision Co Ltd fell by almost 9%.

In a previous $ 50 billion price series, the Trump administration withdrew flat-panel TV proposals for the final list in June.

The new list would also spare fitness trackers from Fitbit Inc., which said in a letter of comment to regulators that the rates would jeopardize its own investments in the United States. Fitbit shares closed down 1% on Monday.

"We welcome this development and we appreciate the time and effort of the administration to listen to the concerns of industry and consumers," said a spokesman for Fitbit Reuters.

NEW LIST

However, some products that help computer networks run, such as routers, will remain on the new list, the official said. This could affect small technology companies such as Eero, a start-up that manufactures home routers and has asked to be exempted from tariffs. In total, about 300 categories of products were selected, including non-technological consumer devices such as bicycle helmets and baby car seats.

Apple did not respond to a request for comments from Reuters and Eero declined to comment. Apple CEO Tim Cook had dinner with US President Donald Trump last month, but gave no details on the talks.

Apple said US tariffs would affect the prices of a "wide range" of Apple products, including its watch, in a letter commenting on the administration's proposals earlier this month.

"Our concern about these tariffs is that the United States will be the hardest hit, which will result in lower US growth and competitiveness and higher prices for US consumers," Apple said in a statement. a letter.

After Apple's comments, Trump said in a tweet that there was an "easy solution" for Apple to avoid tariffs. "Make your products in the United States instead of China. Start building new plants now, "he tweeted on September 8th.

A list of equipment used to make servers and network equipment for data centers is on the list announced Monday.

A group of technology companies, including Cisco Systems Inc., Dell Technologies Inc., Hewlett-Packard Enterprise Co and Juniper Networks, had asked that many of these items be dropped, but they remained on the list with a few exceptions. related accessories.

The group said in a comment to commercial regulators on Sept. 6 that "by increasing the cost of networking products, the proposed fees would hinder the development and adoption of cloud-based services and infrastructure."

Apple also told regulators that some of its data center equipment would likely be affected by rates.

The flea industry has also been affected by the new taxes.

Lam Research Corp, a company that manufactures equipment for chip manufacturing, said in a letter to commercial regulators Sept. 6 that the rights to raw silicon, the semiconductor manufacturing market. All the elements of Lam's letter were included in the final list.

Neither Lam nor the group of technology companies responded immediately to the request for comment.