Apple temporarily escapes new tariffs in escalating US-China trade war

Posted:
in General Discussion edited May 10
U.S. President Donald Trump made good on a trade war deadline on Friday, increasing tariffs on some Chinese imports. While Apple products have so far evaded impact, that may be short-lived.

Tim Cook in China


Goods already under a 10 percent tariff are now subject to 25 percent, according to BBC News. Trump indicated that work is in motion, however, to slap a 25 percent tariff on another $325 billion in Chinese goods, which could harm Apple profits given that most its products are assembled in China by firms like Foxconn and Pegatron.

Talks between the two countries took a turn for the worse recently after the U.S. accused China of backtracking on key points. China has promised to enact "necessary countermeasures" to retaliate for U.S. tariffs, though it is continuing to negotiate.

Apple could theoretically move manufacturing into countries like India and Vietnam -- Indian iPhone manufacturing is expanding -- but the company has strict quality and capacity needs, so there would inevitably be a period of delay in which tariffs would bite. Many of its parts suppliers also operate out of China.

The company is already in a delicate position. While services revenue is growing, they aren't growing fast enough yet to counter falling iPhone sales. Sales of the iPhone have been down year-over-year for two consecutive quarters, and Apple is employing trade-in promotions and regional price cuts to keep them afloat.

Apple may be more likely to absorb any hit, since it can fall back on its $225.4 billion in cash reserves if all else fails.
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Comments

  • Reply 1 of 29
    It's not much of a war. The tariffs haven't worked and raising them again isn't going to change that. The U.S. withdrew from TPP in January of 2017 and is still floundering around trying to get a replacement for it almost 2 1/2 years later.
    edited May 10 Soliralphiek2kwlolliverbadmonk
  • Reply 2 of 29
    DAalsethDAalseth Posts: 652member
    Tariffs are not paid by the country they are applied against. They are paid by consumers in the form of higher prices. China has already been looking at other markets for its goods, and other suppliers for what it imports from the US. I've said from the beginning of this back and forth stupidity that China is in a better position to weather a trade war than the US. With its command economy and population that overall supports the government and views China as the victim, they are willing to tolerate more hardship than the US. China has more allies as well, The current administration has alienated most of those that would normally stand by it. Inflation, lost markets, and loss of jobs dependant on Chines imports. This will not end well for the US.
    jahbladedewmeSolispice-boycintosminicoffeelolliverCarnagebadmonk
  • Reply 3 of 29
    avon b7avon b7 Posts: 3,938member
    The risk of Apple being hit in the crossfire has always been there. Apart from the purely economic aspects, the US-Huawei-China situation will also weigh on the outcome.

    I think China wants to drag things out until the elections.

    If they hit Apple in the meantime, Apple will just have to absorb the impact.
  • Reply 4 of 29
    genovellegenovelle Posts: 967member
    DAalseth said:
    Tariffs are not paid by the country they are applied against. They are paid by consumers in the form of higher prices. China has already been looking at other markets for its goods, and other suppliers for what it imports from the US. I've said from the beginning of this back and forth stupidity that China is in a better position to weather a trade war than the US. With its command economy and population that overall supports the government and views China as the victim, they are willing to tolerate more hardship than the US. China has more allies as well, The current administration has alienated most of those that would normally stand by it. Inflation, lost markets, and loss of jobs dependant on Chines imports. This will not end well for the US.
    True. Walmart already issued warnings that they would be increasing prices equal to the tariff percentage. Trust me they are not the only ones and those prices will not be going down. Higher prices likely also makes the inflates the  GDP, so it would be just another false talking point. 
    dewmeSoli
  • Reply 5 of 29
    It's not much of a war. The tariffs haven't worked and raising them again isn't going to change that. The U.S. withdrew from TPP in January of 2017 and is still floundering around trying to get a replacement for it almost 2 1/2 years later.
    Actually you are very wrong in you comment.  The tariffs are having a big impact upon China's economy, their actual GDP growth (not the fake govt numbers) is below ours and sinking.  Keep in mind China's GDP is only a little more than half of ours and they export a lot more to the US than we export to them.  Moreover, the economic impact and slowdown in China is real spanning infrastructure buildouts to consumer products to real estate, etc. the company I work for can testify to this fact.

    Also TPP had nothing to do with China and deals have been negotiated and are continuing to be negotiated with the countries involved in TPP.   
    6502dws-2jas99rosse59cat52cornchip
  • Reply 6 of 29
    sdw2001sdw2001 Posts: 17,038member
    It's not much of a war. The tariffs haven't worked and raising them again isn't going to change that. The U.S. withdrew from TPP in January of 2017 and is still floundering around trying to get a replacement for it almost 2 1/2 years later.

    The tariffs have abolsutely worked for the purpose they were intended:  Bringing them to the table.  Tariffs don't "work" for their own sake.  They do "work" when they are used as leverage.  
    rosse59cat52yojimbo007spock1234cornchip
  • Reply 7 of 29
    sdw2001sdw2001 Posts: 17,038member

    DAalseth said:
    Tariffs are not paid by the country they are applied against. They are paid by consumers in the form of higher prices. China has already been looking at other markets for its goods, and other suppliers for what it imports from the US. I've said from the beginning of this back and forth stupidity that China is in a better position to weather a trade war than the US. With its command economy and population that overall supports the government and views China as the victim, they are willing to tolerate more hardship than the US. China has more allies as well, The current administration has alienated most of those that would normally stand by it. Inflation, lost markets, and loss of jobs dependant on Chines imports. This will not end well for the US.
    I completely disagree.  I don't like tariffs in general.  But it is precisely because China has a command economy and is robbing us blind that we need to use them.  Trump understands leverage, if nothing else.  So far, it has brought them to table.  They even moved up their recent meetings with some urgency.  As for is in a better position, it's us. We have a massive trade deficit with China.  No other country can come even laughably close to replacing us in terms of what we purchase from China.   The tariffs and other non-tariff barriers we are placing on them are affecting China much more than their retaliation is affecting us.  
    jas99rosse59cat52spock1234
  • Reply 8 of 29

    avon b7 said:
    The risk of Apple being hit in the crossfire has always been there. Apart from the purely economic aspects, the US-Huawei-China situation will also weigh on the outcome.

    I think China wants to drag things out until the elections.

    If they hit Apple in the meantime, Apple will just have to absorb the impact.
    If this were 2020 I think the chance of their being a new trade deal with China would be zero since they would hope Trump loses and the new Administration will capitulate to any of China's demands.  But alas, the election is 18 months away and that is a long time to deal with the pain of the tariffs.  Moreover, the risk is heightened since what if China does not cut a deal and Trump is reelected then President Trump has little to no incentive to cut a deal that is not extremely favorable to the US and China would be permanently wounded (manufacturing would flee China in droves) all because they did not want to end their unethical trade practices and technology theft.

    One must always remember that we are much more important to China's economy then they are to us.  We pretty much only get lower cost goods since China is not creating new products or drugs or other technology breakthroughs yet and maybe not for a long time. You can already see many manufacturers are moving or expanding manufacturing out of China (India, Vietnam, Honduras, etc.) as their labor costs continue to rise rapidly (10%+ / year). 
  • Reply 9 of 29
    sdw2001sdw2001 Posts: 17,038member

    genovelle said:
    DAalseth said:
    Tariffs are not paid by the country they are applied against. They are paid by consumers in the form of higher prices. China has already been looking at other markets for its goods, and other suppliers for what it imports from the US. I've said from the beginning of this back and forth stupidity that China is in a better position to weather a trade war than the US. With its command economy and population that overall supports the government and views China as the victim, they are willing to tolerate more hardship than the US. China has more allies as well, The current administration has alienated most of those that would normally stand by it. Inflation, lost markets, and loss of jobs dependant on Chines imports. This will not end well for the US.
    True. Walmart already issued warnings that they would be increasing prices equal to the tariff percentage. Trust me they are not the only ones and those prices will not be going down. Higher prices likely also makes the inflates the  GDP, so it would be just another false talking point. 
    You can't judge the situation by microcosm.  No doubt, some of our prices will increase.  I don't know about the GDP claim.  That may be true to some extent, but you'd expect to see it in inflation as well.  So far, we haven't.  The point is that overall, we are doing much more damage to China than they are to us.  It's not about Trump, it's about math.  This is what happens when you have a massive trade deficit.  They need us to buy their products more than we need them to buy ours.  
    jas99cat52spock1234
  • Reply 10 of 29
    davendaven Posts: 529member
    The current problem for Apple isn't assumed taxation of products into the USA but the retribution from Chinese consumers who will buy Chinese phones in a boycott of Apple. Once you lose a customer it is hard to get them back. The same is true for agricultural products sold to China from the USA. China is now buying from other countries and it will be hard for the farmers to recuperate. If Trump was smart, and he has proven over and over that he isn't, he would have put up thinly veiled trade barriers much the way China does against foreign countries.
    minicoffeelolliver
  • Reply 11 of 29
    lkrupplkrupp Posts: 7,158member
    DAalseth said:
    Tariffs are not paid by the country they are applied against. They are paid by consumers in the form of higher prices. China has already been looking at other markets for its goods, and other suppliers for what it imports from the US. I've said from the beginning of this back and forth stupidity that China is in a better position to weather a trade war than the US. With its command economy and population that overall supports the government and views China as the victim, they are willing to tolerate more hardship than the US. China has more allies as well, The current administration has alienated most of those that would normally stand by it. Inflation, lost markets, and loss of jobs dependant on Chines imports. This will not end well for the US.
    So we should simply capitulate to China and become subservient to their economic power? The trade balance between the two countries is about as lopsided as can be. I’d be interested in what solution those who oppose trade sanctions propose. More negotiations? That hasn’t worked at all. The Chinese are quite happy to continue negotiations ad infinitum while they go about decimating the U.S. Walk into any retail store and start looking at the merchandise. EVERYTHING is made in China. China is outright stealing IP and technology at an accelerating pace. Do we wait until they decimate our auto industry too. My oldest son is a structural engineer and his company’s board room is ordering engineering to buy Chinese steel no matter what.

    It’s one thing to say trade sanctions aren’t working and are hurting consumers. Consumers have been suffering for years because their jobs have moved to China. What’s the solution?
    spock1234
  • Reply 12 of 29
    spice-boyspice-boy Posts: 837member
    It's not much of a war. The tariffs haven't worked and raising them again isn't going to change that. The U.S. withdrew from TPP in January of 2017 and is still floundering around trying to get a replacement for it almost 2 1/2 years later.
    Actually you are very wrong in you comment.  The tariffs are having a big impact upon China's economy, their actual GDP growth (not the fake govt numbers) is below ours and sinking.  Keep in mind China's GDP is only a little more than half of ours and they export a lot more to the US than we export to them.  Moreover, the economic impact and slowdown in China is real spanning infrastructure buildouts to consumer products to real estate, etc. the company I work for can testify to this fact.

    Also TPP had nothing to do with China and deals have been negotiated and are continuing to be negotiated with the countries involved in TPP.   
    Does Apple's product count as American products or Chinese products? 
  • Reply 13 of 29
    avon b7avon b7 Posts: 3,938member

    avon b7 said:
    The risk of Apple being hit in the crossfire has always been there. Apart from the purely economic aspects, the US-Huawei-China situation will also weigh on the outcome.

    I think China wants to drag things out until the elections.

    If they hit Apple in the meantime, Apple will just have to absorb the impact.
    If this were 2020 I think the chance of their being a new trade deal with China would be zero since they would hope Trump loses and the new Administration will capitulate to any of China's demands.  But alas, the election is 18 months away and that is a long time to deal with the pain of the tariffs.  Moreover, the risk is heightened since what if China does not cut a deal and Trump is reelected then President Trump has little to no incentive to cut a deal that is not extremely favorable to the US and China would be permanently wounded (manufacturing would flee China in droves) all because they did not want to end their unethical trade practices and technology theft.

    One must always remember that we are much more important to China's economy then they are to us.  We pretty much only get lower cost goods since China is not creating new products or drugs or other technology breakthroughs yet and maybe not for a long time. You can already see many manufacturers are moving or expanding manufacturing out of China (India, Vietnam, Honduras, etc.) as their labor costs continue to rise rapidly (10%+ / year). 
    China still has cards to play. One of them being the US debt card.

    In these conflicts both sides get hurt and there is collateral damage beyond geopolitics.

    At this point in time I think Apple would prefer not to get sucked into the conflict. If it does, the political side will take on a new meaning, making things even more unpredictable.
    lollivermuthuk_vanalingam
  • Reply 14 of 29
    apple ][apple ][ Posts: 8,680member
    Keep turning the screws, make 'em hurt.  

    It's about time that somebody has the balls to stand up to China. It should have been done a very long time ago, decades ago, but better late than never.

    With their massive IP theft, currency manipulation, hostile rules for foreign companies and their trade practices,  I'm glad that the US is finally taking a stand.

    US economy = strong. Now is the right time to make that stand.
    edited May 10 rosse59spock1234anantksundaram
  • Reply 15 of 29
    rosse59rosse59 Posts: 14member
    daven said:
    The current problem for Apple isn't assumed taxation of products into the USA but the retribution from Chinese consumers who will buy Chinese phones in a boycott of Apple. Once you lose a customer it is hard to get them back. The same is true for agricultural products sold to China from the USA. China is now buying from other countries and it will be hard for the farmers to recuperate. If Trump was smart, and he has proven over and over that he isn't, he would have put up thinly veiled trade barriers much the way China does against foreign countries.
    It's not hard to get them back if you continue to build a superior product and the competitor keeps making crap.
    spock1234LordeHawkcornchip
  • Reply 16 of 29
    SpamSandwichSpamSandwich Posts: 31,191member
    DAalseth said:
    Tariffs are not paid by the country they are applied against. They are paid by consumers in the form of higher prices. China has already been looking at other markets for its goods, and other suppliers for what it imports from the US. I've said from the beginning of this back and forth stupidity that China is in a better position to weather a trade war than the US. With its command economy and population that overall supports the government and views China as the victim, they are willing to tolerate more hardship than the US. China has more allies as well, The current administration has alienated most of those that would normally stand by it. Inflation, lost markets, and loss of jobs dependant on Chines imports. This will not end well for the US.
    There is no way China will be able to replace the loss of (or a severe restriction on) exports to the US with another source. There aren’t any.
    spock1234
  • Reply 17 of 29
    sacto joesacto joe Posts: 742member
    lkrupp said:
    DAalseth said:
    Tariffs are not paid by the country they are applied against. They are paid by consumers in the form of higher prices. China has already been looking at other markets for its goods, and other suppliers for what it imports from the US. I've said from the beginning of this back and forth stupidity that China is in a better position to weather a trade war than the US. With its command economy and population that overall supports the government and views China as the victim, they are willing to tolerate more hardship than the US. China has more allies as well, The current administration has alienated most of those that would normally stand by it. Inflation, lost markets, and loss of jobs dependant on Chines imports. This will not end well for the US.
    So we should simply capitulate to China and become subservient to their economic power? The trade balance between the two countries is about as lopsided as can be. I’d be interested in what solution those who oppose trade sanctions propose. More negotiations? That hasn’t worked at all. The Chinese are quite happy to continue negotiations ad infinitum while they go about decimating the U.S. Walk into any retail store and start looking at the merchandise. EVERYTHING is made in China. China is outright stealing IP and technology at an accelerating pace. Do we wait until they decimate our auto industry too. My oldest son is a structural engineer and his company’s board room is ordering engineering to buy Chinese steel no matter what.

    It’s one thing to say trade sanctions aren’t working and are hurting consumers. Consumers have been suffering for years because their jobs have moved to China. What’s the solution?
    It’s a tough nut. But the jobs moving to China claim is a bit of a red herring. Unemployment is at it’s lowest in decades. Any future job loss won’t be because of jobs moving to China; it’ll be due to a contracting economy.

    The problem for Trump and the Republicans is that their jobs depend on the economy continuing to hum along. The Chinese know that. 

    If I had to guess, I’d say the Trump administration is going to watch the economy like hawks, particularly in purple states. We may even see them pressuring the Fed to drop interest rates if things go south.

    But tinkering with the economy is fraught with risk (deflation being the big one). Still, the Republicans are very much playing the short game, so I’d guess they’d take that chance if it came down to it. Heck, they’ve already stopped any more rate hikes....
    lolliver
  • Reply 18 of 29
    lkrupplkrupp Posts: 7,158member
    sacto joe said:
    lkrupp said:
    DAalseth said:
    Tariffs are not paid by the country they are applied against. They are paid by consumers in the form of higher prices. China has already been looking at other markets for its goods, and other suppliers for what it imports from the US. I've said from the beginning of this back and forth stupidity that China is in a better position to weather a trade war than the US. With its command economy and population that overall supports the government and views China as the victim, they are willing to tolerate more hardship than the US. China has more allies as well, The current administration has alienated most of those that would normally stand by it. Inflation, lost markets, and loss of jobs dependant on Chines imports. This will not end well for the US.
    So we should simply capitulate to China and become subservient to their economic power? The trade balance between the two countries is about as lopsided as can be. I’d be interested in what solution those who oppose trade sanctions propose. More negotiations? That hasn’t worked at all. The Chinese are quite happy to continue negotiations ad infinitum while they go about decimating the U.S. Walk into any retail store and start looking at the merchandise. EVERYTHING is made in China. China is outright stealing IP and technology at an accelerating pace. Do we wait until they decimate our auto industry too. My oldest son is a structural engineer and his company’s board room is ordering engineering to buy Chinese steel no matter what.

    It’s one thing to say trade sanctions aren’t working and are hurting consumers. Consumers have been suffering for years because their jobs have moved to China. What’s the solution?
    It’s a tough nut. But the jobs moving to China claim is a bit of a red herring. Unemployment is at it’s lowest in decades. Any future job loss won’t be because of jobs moving to China; it’ll be due to a contracting economy.

    The problem for Trump and the Republicans is that their jobs depend on the economy continuing to hum along. The Chinese know that. 

    If I had to guess, I’d say the Trump administration is going to watch the economy like hawks, particularly in purple states. We may even see them pressuring the Fed to drop interest rates if things go south.

    But tinkering with the economy is fraught with risk (deflation being the big one). Still, the Republicans are very much playing the short game, so I’d guess they’d take that chance if it came down to it. Heck, they’ve already stopped any more rate hikes....
    Would you say that the Democrats, on the other hand, are playing the long game? If that’s  the case then they have also failed miserably in their constant negotiations and lopsided trade agreements that go nowhere as China shoves a shiv between our ribs so we bleed. Death by a thousand cuts or all at once. Take your pick.
    edited May 10
  • Reply 19 of 29
    sacto joesacto joe Posts: 742member
    The Democrats are like a herd of cats. I've been one long enough to know. They aren't "playing" this at all.

    As regards China, thou doth protest too much, methinks. China is so very, very far from being a true competitor to the US and the "free world" it isn't even a joke. Yes, they're pirates. In the larger scheme of things, that's their main weakness, and the only way they can get out of that box is to free their people. Anyone see that about to happen?

    (crickets)

    (The following is Off Topic, and possibly this post will get removed by the editors. Hope you get to read it before that happens.)

    You and I are both intelligent enough to know what I mean by long game versus short game, and the inherent problem with playing the short game.

    I'm 73 years old. Once upon a time, I thought of Republicans as the Noble Opposition. That went by the wayside a while back, but never quite so deeply into the weeds as it now has. Why? Because they've played the short game, and then the even shorter game, and now the even shorter game, searching out any and all ways to get the votes to give them power. To do what? Give power to the crazies?

    I don't say that all Republicans are unprincipled. I have too many Republican friends to think that. But their party has sold its soul to the devil for a mess of pottage, to the point where they are no longer even close to being the party of fiscal conservatism they once were and that I once admired. How bad is it? It's so bad that the Democrats are now the fiscal conservatives!

    I call myself a Democrat and a liberal, but a few decades back I was a moderate. And I really haven't changed. Kind of says it all....
    Carnagecornchip
  • Reply 20 of 29
    SpamSandwichSpamSandwich Posts: 31,191member
    sacto joe said:
    The Democrats are like a herd of cats. I've been one long enough to know. They aren't "playing" this at all.

    As regards China, thou doth protest too much, methinks. China is so very, very far from being a true competitor to the US and the "free world" it isn't even a joke. Yes, they're pirates. In the larger scheme of things, that's their main weakness, and the only way they can get out of that box is to free their people. Anyone see that about to happen?

    (crickets)

    (The following is Off Topic, and possibly this post will get removed by the editors. Hope you get to read it before that happens.)

    You and I are both intelligent enough to know what I mean by long game versus short game, and the inherent problem with playing the short game.

    I'm 73 years old. Once upon a time, I thought of Republicans as the Noble Opposition. That went by the wayside a while back, but never quite so deeply into the weeds as it now has. Why? Because they've played the short game, and then the even shorter game, and now the even shorter game, searching out any and all ways to get the votes to give them power. To do what? Give power to the crazies?

    I don't say that all Republicans are unprincipled. I have too many Republican friends to think that. But their party has sold its soul to the devil for a mess of pottage, to the point where they are no longer even close to being the party of fiscal conservatism they once were and that I once admired. How bad is it? It's so bad that the Democrats are now the fiscal conservatives!

    I call myself a Democrat and a liberal, but a few decades back I was a moderate. And I really haven't changed. Kind of says it all....
    You’re right about the underlying criticism, which in my mind is that both parties spend like drunken sailors when given the opportunity. The only thing that changes is what they’re spending our money on. If you’re familiar with the “Green New Deal” there is no way to claim superiority on this matter, other than the fact that the GND is just a wildly irresponsible proposal at this point, and not actual spending. Then if you start to include things like a Federal $15/hr. minimum wage and far-Left ideas like the “Universal Basic Income”... well, they’re all economically harmful, if not destructive.
    edited May 10
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