China’s reaction to Trump’s tariffs could be ‘serious problem’ for Apple

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tariffs
Apple CEO Tim Cook has urged President Donald Trump to avoid tariffs with China.
Photos: White House/Apple

The Trump administration is expected to spare three Apple products from the next round of tariffs, but escalating conflicts with China could still be a costly problem for the tech giant should a full-blown trade war ensue.

Bloomberg news, siting five unidentified sources, said a product code that covers the Apple Watch, AirPods, and HomePod smart speaker, is not listed among some $200 billion in Chinese products subject to a new 10 percent tariff expected to be announced later this week.

While this may seem like good news for Apple, China is still threatening retaliation that could be “fairly devastating” to American companies, like Apple.

Tech tariffs: Cook urges alternative measures

Apple CEO Tim Cook has been lobbying administration officials to avoid imposing tariffs. Cook last month dined with President Donald Trump and First Lady Malania Trump at Trump’s New Jersey golf club. Cook’s visit was followed by a letter from Apple to U.S. Trade Rep. Robert Lighthizer requesting the government seek other policies to address trade issues.

In the letter sent earlier this month, Apple said a range of its products would be hit and warned that the proposed tariffs, which could lead to higher production costs, higher consumer prices and “lower overall U.S. economic growth, and other unintended economic consequences.”

Cook did not specify which products in the letter. Mark Vena, an analyst with technology research firm Moor Insights & Strategy, told the Wall Street Journal today that Apple has the inventory of key components for products, like the iPhone, to get through the holiday but the threats of retaliation by China “could be a serious problem” later on.

A Chinese Communist newspaper earlier this year said Apple would be among the U.S. companies “most damaged” in a trade war.

The Bloomberg report quoted White House economic adviser Larry Kudlow speaking to the Economic Club of New York earlier today. He said the Trump administration regularly consults with Trump.

“We’ve spoken to Mr. Tim Cook many times,” Kudlow said. “He’s a really smart guy. He’s given us some good advice.”

Sources: Bloomberg and the Wall Street Journal