Trade war escalates: Trump hikes China tariffs to 125%, pauses others for 90 days
Apple's stock has regained some of its losses after the announcement of a 90-day pause on some new tariffs, while the tariff on imports from China to the U.S. has been jacked up to 125%.
Tim Cook (left) and President Trump
Following the introduction of a 104% tariff rate against China and further retaliation from China, Apple's stock was bracing for another day of turbulence on the market. However, after an announcement of a tariff pause, Apple's been given a bit of a reprieve.
In an announcement on Wednesday, President Donald Trump confirmed that he had authorized a 90-day pause on new tariffs against most countries the U.S. deals with. At the same time, there is also a lowering of the reciprocal tariff to 10% for the period.
CNBC shares Trump's Truth Social post, explaining that more than 75 countries have attempted to negotiate with the U.S. over the tariffs. Trump also takes a moment to take a dig at China's reactionary tariff increases by saying the countries have not retaliated against the U.S.
The 90-day pause will give the Trump Administration time to negotiate with the responding countries, presumably to make deals with each one that still benefits the U.S. and Trump's aims.
At the same time, Trump cited a "lack of respect" from China, raising the tariff against imports from the country even further. Earlier in the day, the 104% tariff rate was implemented, but it's now moved to 125% with immediate effect.
Trump adds that he hopes China will realise that "ripping off the U.S.A" and other countries is "no longer sustainable or acceptable."
It is worth remembering that the tariffs were instigated by the Trump Administration first. China has responded to the tariffs by applying its own, but in each case, it has simply mirrored the size of increases performed by the United States.
While China is singled out as being a country that retaliated, it is unclear why Trump hasn't mentioned the EU. Ahead of Trump's announcement, the European Union voted to approve the first set of retaliatory tariffs against the U.S.
A boost for Apple
The reaction from the stock market was very positive, including a 7% jump on Nasdaq and a 2,000-point surge for the Dow.
Apple's stock, which has felt pressure over the last week, has also benefited. At the time of publication, the share price is up 11.28% in response.
While the tariff against China is going up as retaliation for China increasing its own tariff on U.S. imports again, Apple stands to benefit from an easing of other tariffs.
The reduction of the reciprocal tariffs for other countries down to the 10% level reduces what Apple will have to pay for some of its product imports. After expanding its supply chain to be less China-centric, Apple can now take advantage of its production in India, Vietnam, and other countries to supply U.S. customers.
With the possibility of negotiations between Trump and countries looking to make a deal, there could be a glimmer of hope once the 90-day period is over. The other countries where Apple's supply chain is situated may probably come out of the pause with a better tariff than the ones announced about a week ago.
Still, that 10% is in most cases about double the previous export rates.
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Comments
I guess what's pretty clear for Apple, though, is that they need to get Indian production up to a level sufficient to meet US demand. Also, be sure to have a stash of inventory in the US for the next time Trump throws a tariff fit.
Phase 2: Announce tariffs
Phase 3: Buy stocks
Phase 4: Announce pause on tariffs
Grifting at the highest levels of government and far too many people are not only OK with this but have convinced themselves that this is good for them and the future of the nation. These are the people that would try to get Biden impeached for accepting a free ice cream cone from a vendor, claimed that Kamala would sink the economy despite a history of the economy suffering during Republicans in control, and would call any Democrat or non-MAGA Republican wishy washy if they ever reversed their position on something even if was decades long.
PS: You're using a term from a book that the 6x bankruptcy king didn't write. It's not good business acumen if you can only ever profit from lying and stealing.
The economy is an ecosystem. There are producers, there are predators, there are all sorts of economic creatures that make up a world economy. Overall they coexist in balance. But with these tariffs getting slammed on and off there will be an extinction event. Oh the well established companies will get hurt, but they will survive, much like frogs survived the end Cretaceous extinction. But small companies, companies that have a limited source of their materials, that have limited resources, or are just unlucky and get squashed will not. The more of these abrupt changes there are the worse the extinction event, much like the Devonian which was several back to back in short order.
Even if Trump only has these tariffs on for a short time in total, slamming them on, then yanking them off “pausing them” will be very hard on the ecosystem, the economy. There will be a lot of companies, livelihoods, and families, that risk going extinct.
- This morning "tariffs on everyone - penguins especially".
- Earlier today "Trump to hit medicine with major tariffs"
- A bit later "125% on China". The Apple Polishing Cloth could be $45.
- Currently "10% on everything, 125% on China, 25% on steel and aluminum"
- And tomorrow the numbers are...
It takes 30-40 days to ship products from a factory. Now we get 3 months of uncertainty.Supply chains remain in distress.
The Hill should take back control. If Trump can wait 90 days then this is no national emergency.
He's also following the blueprint of autocrats and authoritarians who pay favor to oligarchs and companies who fall in line. He'll issue "exemptions" and "work arounds" to those who "bend a knee". American democracy is quickly eroding.