iPhone might get caught in Trump tariffs after all

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Hong Kong police arrest smugglers with $1 million of iPhones and other devices
Most Apple products are assembled in China, and sell well there too, but U.S. iPhone tariffs could bring up the cost in this country.
Photo: Ed Hardy/Cult of Mac

It was widely reported yesterday that iPhones assembled in China are safe from having tariffs placed on them by the Trump administration. Now the White House trade advisor says he’s unaware of any such exemption.

Import taxes placed on the import of iPhone units could significantly raise the cost of these devices, if Apple chooses to pass these costs on to consumers. 

The report that Apple won’t be the subject of tariffs from the Trump administration came from The New York Times. The source was unnamed, just described as “a person familiar with the talks who declined to speak on the record for fear of upsetting negotiations.”

But after that report was published, White House trade advisor Peter Navarro went on the record to tell CNBC that he has no knowledge of an iPhone tariff exemption. That doesn’t mean there isn’t one, but it’s not a good sign for Apple that one of President Trump’s top advisers on trade and tariffs is unaware of it.

iPhone not made in China. But still…

Apple CEO Tim Cook has said many times that the iPhone isn’t made in China. It’s assembled there by Foxconn, but the design work happens in the U.S., and many components are produced in America as well.

Nevertheless, the Trump administration could place import taxes on iPhone units as they are brought into the U.S. to be sold to consumers.

Special relationship might prevent iPhone tariffs

The relationship Tim Cook has developed with the President might forestall iPhone tariffs. The two men recently met face-to-face, and found common ground: the recent Republican tax cuts. 

And there’s one more factor in Apple’s favor: Trump himself carries at least two iPhones at all times.

Apple has a lot to lose in U.S. trade war with China. It goes beyond where its products are assembled because the company takes in about 20 percent of its revenue from sales in China. It also sees that country as its biggest potential source of growth.