The iPhone is about to be caught in President Trump’s trade war with China. A month from today, the US will begin charging a 10% tax to import iPhone, iPad, and other devices. They are part of $300 billion dollars worth of imports getting new tariffs.
Trump’s decision caused a 2.0% drop in Apple’s share price.
US/China trade talks not going well
The US and China just finished a round of trade negotiations, which Trump called “constructive” on his Twitter feed. However, he then went on to accuse China of not following through with earlier agreements.
The president then said “Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country.”
…during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%…
— Donald J. Trump (@realDonaldTrump) August 1, 2019
More expensive iPhones on the way?
The Trump Administration announced back in May what products would be hit in the next round of import taxes.
Apple warned U.S. trade representative Robert Lighthizer that “The proposed tariff list covers all of Apple’s major products, including iPhone, iPad, Mac, AirPods, and AppleTV, as well as the parts and batteries used to repair products in the United States. The proposed tariffs also cover accessories that Apple makes for these devices, such as monitors and keyboards.”
How Apple will deal with these additional taxes is not yet known. It might absorb the cost, but it could also increase the price of its products.
The Chinese government and businesses don’t pay these tariffs, but are nevertheless being hurt. Apple is reportedly moving some of its production to India, and other US businesses are also investigating other places to make their products besides China.