Following Trump’s announcement of a 10% import tariff on all imports from China, most Apple products in the US may see price increases. While Apple has been making strides to diversify its supply chain, a significant portion of its products continues to be assembled in China.
During his first term, Trump enacted similar tariffs on a wide range of products. At that time, Apple managed to secure some exemptions, but the current policy appears to be a sweeping 10% tariff affecting all products entering the US from China.
Prior chip tariff threat not implemented
Initially, Trump threatened to impose import tariffs as high as 100% on Chinese-made semiconductor chips entering the US. This wouldn’t significantly affect Apple, as it pertained only to chips rather than the end devices containing them.
However, it was quickly noted that such a move would adversely impact US companies manufacturing electronic products domestically that rely on imported components from China, leading Trump to abandon this proposal.
General 10% tariff officially enacted
Trump then shifted his focus to threatening a flat 25% tariff on all imports from Canada and Mexico, in addition to the blanket 10% tariff on goods coming from China.
In response, Canada and Mexico offered a mix of concessions and threats. On the positive side, both countries promised to enhance border security measures against illegal migration and drug smuggling. While Canada mostly reiterated previously announced plans, it allowed Trump to claim a diplomatic win. On the threat side, all three nations indicated potential retaliatory tariffs against US products.
Although Trump announced a 30-day delay on tariffs for Canada and Mexico, BBC News has reported that the tariffs on Chinese imports have been officially enacted.
President Donald Trump has agreed to postpone the imposition of 25% tariffs on Canada and Mexico for 30 days, averting a potentially damaging trade confrontation […]
However, the 10% tariff on Chinese imports took effect promptly after a deadline at 00:01 EST (05:00 GMT) on Tuesday. Following this decision, Beijing announced retaliatory tariffs on a selection of American goods.
Increased import costs for Apple products
With the implementation of this new policy, Apple is now required to pay an additional 10% on all products sourced from China.
Most companies are likely to transfer these extra costs to US consumers through increased pricing, although Apple’s response remains uncertain. The company could also opt to absorb these higher costs, which would affect its profit margins.
Insights from DMN
Trump’s decisions underscore a persistent lack of understanding about how tariffs function. He often claims foreign companies bear the burden of these tariffs, when, in fact, they are paid by American businesses and consumers importing goods from China.
Historically, Apple has approached cost absorption and price hikes with a mixed strategy. Given the unpredictable nature of the current situation, with Trump frequently changing course, it seems probable that Apple will hold off from making immediate adjustments. Once the status of the tariffs becomes more definitive, the company will need to decide on a course of action.
Image Credit: Apple
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