A new set of tariffs from the Trump administration will put a 10 percent import tax on smartwatches, fitness trackers, smart speakers, and Bluetooth headphones, starting September 1st. The administration plans to delay proposed tariffs on most consumer electronics until December 15th, including cell phones and laptops.
But the tariffs are still likely to land heavily on Apple, which relies on Chinese manufacturing for its HomePod, AirPods, and Apple Watch. These goods were exempted last year after manufacturers sent letters to the government asking for relief. “It is difficult to see how tariffs that hurt U.S. companies and U.S. consumers will advance the Government’s objectives with respect to China’s technology policies,” Apple wrote at the time.
Although the iPhone and MacBook Pro are spared until December, this tariff hike will still have a significant impact on Apple’s bottom line. CEO Tim Cook said during the company’s last earnings call that, when combined, the company’s divisions for services, wearables, home, and accessories approach the size of a Fortune 50 company.
Apple’s seen the tariffs coming for nearly a year now and has reportedly explored moving manufacturing out of China in response. It also already experienced a 10 percent import tax hike that affected its chargers. Its prices didn’t change, however; Apple and its suppliers absorbed the difference. We’ve reached out to Apple for comment on this most recent tariff news and will update if we hear back.
Comments
How are Trump supporters going to spin this one?
By dyslexictom on 08.13.19 3:43pm
Apple is for liberal elites???
By OooUuu on 08.13.19 4:13pm
Not a Trump supporter but someone super wary about China. This won’t help America, It causes companies instead to move manufacturing out of China in into other countries destabilizing China’s economy in the process. That is the purpose of this.
By Dronephone on 08.13.19 10:34pm
It won’t derail China.
By Antron Caldwell on 08.13.19 11:18pm
It actually can and will if enough companies move production out of China. The problem for Trump is that he intends these tariffs to move production back to the US. That isn’t going to happen, more likely people will just move assembly to Vietnam, and then failing that some other developing Asian nation, and failing that a developing African nation, and so on and so forth.
By ddhboy on 08.14.19 10:17am
There was a trade deal that was supposed to do that, but some guy named Trump pulled out of the deal.
https://en.wikipedia.org/wiki/Trans-Pacific_Partnership
The tariffs were sold directly as a thing that was good for America, and Trump continues to believe that China is the one paying those tariffs. They are not; Americans are. On top of that, the collected tariffs are then diverted to American farmers as subsidies to help make up their loss of exports. So Trump is making Americans pay for American farmers for not having sold their goods.
Sounds like a great plan.
By dyslexictom on 08.14.19 12:42am
I’m willing to bet Chinese manufacturing is cheaper by more than 10% when compared to other countries. I doubt if this will lead to a mass scale shift in production.
By ujwalsoni on 08.14.19 6:19am
Yeah…its good on paper but I really do not see this happening…they could move it to somewhere like India BUT then same thing will happen there!
By number1024 on 08.14.19 6:21am
"Happy to pay any tax with Trump in it’s name! That’ll show those sneaky Chinese!"
Betcha.
By andy.gates.9887 on 08.14.19 8:27am
The tax will make absolutely no difference on these products as Apple has added a massive mark up already. They can simply take less money and maintain the price. Anything else for me would be unacceptable on Apple’s part.
Items sold on a minimal profit margin will go up in price as they will not be sold at a loss, but items with a healthy profit margin should maintain their prices, otherwise the maintaining the per-item profit by raising the prices, would be more than offset by the drop in sales numbers. Apple has judged the most people are willing to pay and pegged the products at that price, so I don’t expect a change.
By PJE on 08.13.19 3:52pm
You clearly do not understand how Apple handles their profit margins. There is no way they will eat this tariff, they will pass it on to the customer and the customer will ultimately pay, as they always do with these pointless tariffs that accomplish nothing but hurt the American consumer.
By BeeksElectric on 08.13.19 4:01pm
In theory Chinese products should become more expensive, so that American customers buy the cheaper American product instead. America first and stuff.
In reality you Americans will just pay a higher price for Apple Watches and Airpods for Christmas.
By Polarbear001 on 08.13.19 4:34pm
Also, there isn’t necessarily an American-made equivalent to everything.
By SRPuffinstuff on 08.13.19 5:17pm
Seriously, when essentially all electronics manufacturing is done in China, companies have zero incentive to bring manufacturing home. There are no other major competition manufacturing in America, so they’re not missing out.
At best they’ll move manufacturing to another country. But definitely not the States. And that calculus is really whether the investment to move will be cheaper than simply waiting out the rest of this buffoon’s term.
By urname on 08.13.19 6:24pm
you’re absolutely right. They will move manufacturing to other cheaper countries. Infact many manufacturing already shifted to cheaper countries like vietnam india.
they simply make the parts in china, ship it to india vietnam, assemble it there, slap "Made in vietnam" sticker and import it to USA. USA is now trying to impose tariffs on made in vietnam products
By NotACookieMonster on 08.14.19 12:33am
This is exactly what Samsung have done. They are closing their remaining factory in China and will now manufacture everything in South Korea, Vietnam and India.
By Truth Herz on 08.14.19 8:23am
You are off by a bit. The real result is the manufacturing will go to other countries like Vietnam instead. As an America first person this will work to destabilize China’s Economy. (I live here so it benefits me.)
By Dronephone on 08.13.19 10:37pm
This is how it should work in theory.
Reality is that many chinese companies are setting up assembling plants in these countries, ship in parts made in china, assemble them in these countries, slap a "made in vietnam" sticker and importing it to USA
By NotACookieMonster on 08.14.19 12:34am
A few years ago, Apple changed their prices in the UK – possibly as a result of the Brexit vote, which tanked the pound. I was waiting for the £1299 12" Macbook to drop to £999. It went up to £1699. I bought a Surface Pro 4 for £799.
Apple offered to take my iPhone 7 in exchange for an iPhone X, total cost to change £870. Instead I went to Samsung, which took my iPhone 7 in exchange for an S9, total cost to change £350.
There’s a limit to how high they can raise their prices without losing customers.
By rbrian on 08.13.19 4:35pm
Except that these tarriffs affect entire categories of products, so you’re likely to see everything go up together. Samsung, et al. doesn’t have the profit margin to spare, and Apple knows the difference in value their brand has over Samsung.
By ench on 08.13.19 11:38pm
The backtracking on increasing certain electronic tariffs is evidence of what this administration is trying to hide: Americans pay. Companies pass it onto consumers or eat it, but either way, Americans are the ones getting fucked. And I always thought Trump preferred Eastern Europeans.
By dot. on 08.13.19 5:54pm
Wait, are we for or against increasing tax revenue?
By Dirty_Dogg on 08.13.19 8:04pm
Taxes on goods consumed primarily by the non-affluent is regressive. If this were tariffs on >$10,000 goods it would make more sense. But right now Americans who aren’t millionaires are the ones shouldering the additional tax burden.
By dyslexictom on 08.13.19 8:26pm
Increase in tax revenue should ideally result from increased economic activity, not by ad valorem increases or expanding the tax base alone.
By ujwalsoni on 08.14.19 6:14am
Aaaahhh not the children AirPods!!
By ujwalsoni on 08.14.19 6:12am