iPhone could be hit by incoming $500B U.S. tariff threat on Chinese imports

Posted:
in iPhone edited July 2018
Apple may not remain unscathed in the ongoing trade war between the United States and China, with new U.S. threats to levy practically all imports from China entering the country likely to include the iPhone.




So far, iPhones have yet to be affected by any of the levies imposed on imports of Chinese goods, including the $34 billion of levies applied on July 6 and another round expected to commence in August valued at $16 billion. A third batch of levies, announced in July and affecting $200 billion in goods, is also thought to only affect some models of the Apple Watch, and crucially not the iPhone.

According to experts speaking to the Wall Street Journal, the administration of President Donald Trump is threatening yet another set of tariffs against Chinese imports, this time affecting $500 billion in goods. The threat is also thought to cover practically everything sent from China to the U.S., including iPhones.

In 2017, data from the International Trade Center reveals approximately $45 billion worth of mobile phones were shipped from China to the United States for the entire year.

It was previously thought the iPhone would be immune from the trade war, with a report in June claiming Apple CEO Tim Cook was promised such restrictions would not be extended to the iPhone at all. It is unknown if the promise was made by the president or by another White House official, nor when the promise was made.

If levies are applied against the iPhone, this would raise the cost to Apple for the China-assembled smartphones into the United States, possibly by as much as 10 percent. Based on an IHS Markit-estimated import price of $368 for the iPhone X, this would increase the cost of the iPhone X by $37, which Apple could either cover by reducing its profit or by increasing the device's cost to consumers.

Tariffs against U.S. imports of the iPhone are not the only way Apple could feel the effects of the trade war. If China were to retaliate, there is the possibility it could turn on Apple as a representative of the United States, making its already difficult existence in the market even tougher.

China imports only around $130 billion in goods from the United States, making it hard for tariffs to apply to U.S. imports in a similar way, but the experts suggest higher duties against American companies could still be applied.

Apple currently occupies 9 percent of the Chinese smartphone market, as well as operating the successful App Store and operating 40 Apple Store locations across the country. These, as well as Apple's willingness to increase its footing in the market, makes the company a potential target for extra fees.

At present, there is a value-added tax of 16 percent affecting iPhone imports.

It is noted that Apple's supply chain indirectly accounts for 3 million jobs in the country, mostly via partners like Foxconn. Combined with the the 1.5 million app developers in the country, it is suggested this could cause China to be careful about retaliation.

"It's like a double-edged sword," said Tokyo National Graduate Institute for Policy Studies economics professor Yuqing Xing. "If the Chinese government really tries to do something, that will hurt itself."
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Comments

  • Reply 1 of 35
    welshdogwelshdog Posts: 1,684member
    As usual, situations like this are complex. One thing to add is that the administration wants to devalue the dollar, which works in Apple's favor. Their products become cheaper in overseas markets. Potentially dollar devaulation could offset some of the tariff costs.
    lostkiwiracerhomie3
  • Reply 2 of 35
    What would be the point of a tariff on iPhones? It's not like we have any domestically produced smartphones.
    welshdogtmayEsquireCatsGeorgeBMac
  • Reply 3 of 35
    ronnronn Posts: 328member
    What would be the point of a tariff on iPhones? It's not like we have any domestically produced smartphones.
    FTA:  "If levies are applied against the iPhone, this would raise the cost to Apple for the China-assembled smartphones into the United States, possibly by as much as 10 percent."
  • Reply 4 of 35
    racerhomie3racerhomie3 Posts: 1,091member
     Hopefully Apple look hard and long at this And start manufacturing some phones in the US ,USA USA!
  • Reply 5 of 35
     Hopefully Apple look hard and long at this And start manufacturing some phones in the US ,USA USA!
    Or not import any iPhones at all. I would be curious how it would affect the US economy.
  • Reply 6 of 35
    nunzynunzy Posts: 662member
    I think that apple is going to be just fine. They will pull whatever strings are needed in order to ensure that.
    backstabjbdragon
  • Reply 7 of 35
    DAalsethDAalseth Posts: 614member
    Okay here’s a question. I live in Canada. I buy my Apple products from the Apple.ca store. Theoretically the tarriffs would not hit my purchases. However, I’ve noticed that everything I order is routed through the US. I wonder if I would get clipped by this just because it passes through the country.
  • Reply 8 of 35
    SpamSandwichSpamSandwich Posts: 31,094member
    Pres. Trump previously assured Cook that Apple would not be part of any tariffs. And the Chinese government would be fools to retaliate using Apple as an example. Apple employs tens of thousands of Chinese workers there.
    jbdragonanantksundaram
  • Reply 9 of 35
    512ke512ke Posts: 782member
    That's the thing about a trade war... there can be unforeseen escalation and casualties. 

    I get the goals of wanting fairer trade and encouraging manufacturing jobs in the USA... but will this trade war accomplish any of that? Personally I'm deeply skeptical.


    edited July 2018 frankieronnsingularitylarryadewme
  • Reply 10 of 35
    frankiefrankie Posts: 371member
    Pres. Trump previously assured Cook that Apple would not be part of any tariffs. And the Chinese government would be fools to retaliate using Apple as an example. Apple employs tens of thousands of Chinese workers there.
    Why should Apple be exclusively spared when others aren't?
    ronngatorguy
  • Reply 11 of 35
    nunzynunzy Posts: 662member
    frankie said:
    Pres. Trump previously assured Cook that Apple would not be part of any tariffs. And the Chinese government would be fools to retaliate using Apple as an example. Apple employs tens of thousands of Chinese workers there.
    Why should Apple be exclusively spared when others aren't?
    A lot of Apple customers are also Trump voters.  You don't really think that Jared and Ivanka use Android, do you?
  • Reply 12 of 35
    dewmedewme Posts: 2,055member
    There's a high stakes game of Chicken going on with the economy. The average consumers on all sides are getting caught in a conflict that has no winnable outcome. The one percenters, i.e., those writing the laws and controlling the politicians, are going to come out of this perfectly fine financially. They always do. The top nine percenters will weather the storm with some pain. The remaining ninety percent are going to be crushed like ants and think they are "winning." The impact of tariffs already being levied has already negated the benefits that the new tax law was supposedly going to deliver tiny benefits to the majority of the middle class. It's only just started.
    edited July 2018 larryaronn
  • Reply 13 of 35
    SpamSandwichSpamSandwich Posts: 31,094member
    frankie said:
    Pres. Trump previously assured Cook that Apple would not be part of any tariffs. And the Chinese government would be fools to retaliate using Apple as an example. Apple employs tens of thousands of Chinese workers there.
    Why should Apple be exclusively spared when others aren't?
    I think there should be no tariffs whatsoever, so you're asking the wrong person. However, China should simultaneously be kicked out of the WTO (World Trade Organization) for their many unpunished violations.
  • Reply 14 of 35
    mdriftmeyermdriftmeyer Posts: 7,259member
    nunzy said:
    frankie said:
    Pres. Trump previously assured Cook that Apple would not be part of any tariffs. And the Chinese government would be fools to retaliate using Apple as an example. Apple employs tens of thousands of Chinese workers there.
    Why should Apple be exclusively spared when others aren't?
    A lot of Apple customers are also Trump voters.  You don't really think that Jared and Ivanka use Android, do you?
    Far smalller minority perhaps, but far more Trump voters are Android users as they don't want to pay for anything. Majority of food stamp/welfare recipients are white trash Amerikans who vote Trump and GOP.
    nunzy
  • Reply 15 of 35
    stevo-nzstevo-nz Posts: 11member
     Hopefully Apple look hard and long at this And start manufacturing some phones in the US ,USA USA!
    Actually to manufacture the iPhone in USA would be extremely expensive. Something like 300 parts of the iPhone are produced in approx 100 countries which are then sent to China where the iPhone is then put together. Many of those parts will have additional tariffs put on them when entering the USA if you were to manage them locally. Tariffs = Fail.
    dewmeEsquireCatsronn
  • Reply 16 of 35
    wizard69wizard69 Posts: 12,787member
    What would be the point of a tariff on iPhones? It's not like we have any domestically produced smartphones.
    There are many good reasons to do so.   One big one is simply to encourage
    China to bring down the many barriers there to doing business in that country.   This is perhaps the biggest problem an one sided trading process that doesn't allow for American businesses to benefit from the possibility of trade in China.    Imagine a business where you only buy and never sell a product, you are not likely to stay in business long.   A big part of the trade problem is the fixed exchange rate that China maintains vs the US dollar, this really muddies the waters as allowing the currency in China float to a natural value would dramatically impact the prices of Chines goods.

    There are other reasons too, the lack of regulation, systemic corruption and greed has lead to an economic bubble in China largely focused on real estate.    It is so bad and there is so much money tied up in critically bad real estate, that it is completely possible to collapse China economy and maybe even bring about regime change.

    What is surprising about China, a supposedly communist country is the wealth that is tie up in a few often government connected individuals.    It isn't a place where wealth has spread to the poor ultimately economic pressure could bring about demands upon the government to open up the gravy train to the wider population.  

    Lastly You have the moral question that few companies in the USA want to deal with.    Lets face it most businesses went to China because of the slave like wages paid to worker there.    If the administration can get business and people in general thinking about the moral evils of doing business in China or buying goods from there, we might have some better decision making here in the USA.

    In a nut shell it is a very complex situation but one that has been ignored for far too long.
    EsquireCatsanantksundaram
  • Reply 17 of 35
    wizard69wizard69 Posts: 12,787member
    Pres. Trump previously assured Cook that Apple would not be part of any tariffs. And the Chinese government would be fools to retaliate using Apple as an example. Apple employs tens of thousands of Chinese workers there.
    I highly doubt that Trump absolutely assured Cook of that.    What gets reported and what actually transpired in these discussion is very likely two different things.   Given that I've seen nothing that indicates that Trump offered such assurance.    In fact from a political standpoint Apple should have been one of the first American companies targeted.


  • Reply 18 of 35
    wizard69wizard69 Posts: 12,787member
    dewme said:
    There's a high stakes game of Chicken going on with the economy. The average consumers on all sides are getting caught in a conflict that has no winnable outcome. The one percenters, i.e., those writing the laws and controlling the politicians, are going to come out of this perfectly fine financially. They always do. The top nine percenters will weather the storm with some pain. The remaining ninety percent are going to be crushed like ants and think they are "winning." The impact of tariffs already being levied has already negated the benefits that the new tax law was supposedly going to deliver tiny benefits to the majority of the middle class. It's only just started.
    I really don't thin you know what you are talking about, the economy in the USA is on a roll and employment is at record highs.    It is actually prime time to start up a business.
    SpamSandwich
  • Reply 19 of 35
    wizard69wizard69 Posts: 12,787member
    nunzy said:
    frankie said:
    Pres. Trump previously assured Cook that Apple would not be part of any tariffs. And the Chinese government would be fools to retaliate using Apple as an example. Apple employs tens of thousands of Chinese workers there.
    Why should Apple be exclusively spared when others aren't?
    A lot of Apple customers are also Trump voters.  You don't really think that Jared and Ivanka use Android, do you?
    Far smalller minority perhaps, but far more Trump voters are Android users as they don't want to pay for anything. Majority of food stamp/welfare recipients are white trash Amerikans who vote Trump and GOP.
    Maybe where you live but locally the vast majority of Democrats are actually carrying Android phones.   As for the white trash I'd be surprised if most of them even know how to vote.    Most of us that voted for Trump are getting exactly what we wanted and that is real change with respect to how the US deals with the rest of the world.   We especially rejected the ignorance of the Obama regime and the horrors that a Clinton presidency would have brought.

    When it comes to trade the biggest problem many business have in the USA is the barriers put up by other countries to keep those products and businesses out of a country.    There is a very noticeable bias in many places that at time are totally irrational.   It isn't just China but places like Canada, Brazil, The EU (of all places) and many others.

    The EU by the way has a extremely intense bias against successful American companies and as such American companies are regularly discriminated against.   The law suits against Google, Apple and other high profile tech companies are only a tip of the ice berg.    Brazil is another country that has unfathomable laws that at times can only be described as ignorant.  

    Case in point with Brazil, if you need to take a business trip there to help out with technical problems, say in a manufacturing plant you have located there, you best say on the visa application that you are going there for business meetings.    God forbid you mention to anyone at immigration that you are there to work with the technical team members to solve a problem or two.   Now you may not see this as a trade barrier but it is certainly a barrier to business.   In Brazil that is only the start of the iceberg.   Now all of that being said I understand the need Brazil has to develop its economy but at this point they seem to have done more to harm it than to help it.

    In the end tariffs are just another tool a country has to bring about the results they are seeking.    I suspect that most countries will be more than willing to seek equitable deals.   The hold outs, China will likely be one, will eventually see the light.   The primary reason being that they will suffer the most in such an economic war, America is running strong right now and that is a good thing when it comes to negotiating.
    nunzy
  • Reply 20 of 35
    jbdragonjbdragon Posts: 2,112member
    The tariffs will hurt China far, far more than the U.S. Just because trade has been so unbalanced for so long. The U.S. far, far, far imports China Made goods. It's easier to list what's NOT made in China. Then American goods going into China. If China doesn't want to be more fair in trade, than something has to actually happen. So it's tariffs. So you as a customer of China made goods will have to pay a few dollars more for things for a while. Or cut back what you buy from China. A tariff war will hurt China far more than the U.S. We in the end win either way. China wants to continue the war, businesses come back to the U.S., creating Jobs. The tariff war ends, with China allowing a lot more products into China, more business for U.S. company's, more jobs created.

    The simple fact of the matter is, we American's have been getting screwed over by China for years as jobs, year after year fled to China. Do we just continue down that path? I think it should be a level playing field. China has a growing middle class and American products shouldn't be blocked from the China market.

    End the tariff's, stop buying Chinese made products!!! China caves, the U.S. get's what it wants, the tariff's go away.
    edited July 2018
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