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Apple claims latest US tariffs will affect many products

Apple claims latest US tariffs will affect many products

Apple has said that the latest proposed round of US tariffs on Chinese imports would have a financial impact on a "wide range" of its product lineup.

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By Noah L. Wilson 10.09.2018

Apple has said that the latest proposed round of US tariffs on Chinese imports would have a financial impact on a “wide range” of its product lineup, including the Apple Watch, after US President Donald Trump stated on Friday that he is preparing to levy all goods “at short notice.”

The tech giant did not reveal specific revenue details about the potentially affected products, but its smartwatch likely tops the list in terms of sales. Leading analyst company Bernstein believes that the Apple Watch generated more than $6bn in revenue in 2017, though this accounts for a relatively small percentage of the $229bn that Apple accumulated overall.

Apple is becoming increasingly concerned about the escalating trade war with China. It submitted an unsigned letter last week with information about how the latest tariffs on Chinese products worth $200bn will affect its products and bottom line.

However, Trump appears to be committed to a protracted trade battle, especially as China’s trade surplus soared to a record $31.1bn in August. He outlined his intentions on Friday aboard Air Force One, where he threatened to introduce tariffs on an additional $267bn of goods, which would effectively cover all of China’s imports.

"We believe the US government will continue to escalate the scale and scope of trade and investment measures against China," Australia & New Zealand Banking Group Ltd. Chief Greater China Economist Raymond Yeung said. "This policy direction is unlikely to change even after the US mid-term elections in November.”

Apple is now facing increasing costs, as cell phones will finally be on the trade hit list if Trump goes ahead with new levies in the coming days. The company did not say whether this would affect its flagship smartphones or the iPad, but its Airpods headphones and new HomePod smart speaker will fall under the $200bn tariff rollout. A range of accessories, including keyboards and chargers, will be subject to the new tariffs, as will R&D equipment and logic boards with microprocessing units.

“Our concern with these tariffs is that the US will be hardest hit, and that will result in lower US growth and competitiveness and higher prices for US consumers,” Apple noted in its letter submitted on Wednesday. It added: “Given the balance of Apple’s economic footprint, the burden of the proposed tariffs will fall much more heavily on the United States than on China.”

Trump responded to Apple by urging the tech giant to manufacturer products domestically. He said on Twitter: “Apple prices may increase because of the massive tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now.”

Apple has been aware of the possible effects of the China-US trade conflict for some time, as Chief Executive Officer Tim Cook noted back in July that new levies could affect its data centers. Reuters also reported in the summer that tariffs are likely to have an impact on the production of the Apple Watch.

Apple shares were down 0.8% in trading on Friday, and it appears that many of the big players in the technology sector will have to weather the trade storm in the coming week. Reuters said that corporations in this sector will be among the “biggest potential losers” in the initial round of tariffs. Along with Apple, Intel Corp. and Fitbit will also face issues in some way. 

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