Apple may have dodged a major tariff bullet last week, but the Trump administration is making it clear there’s another one waiting in the chamber.
Driving the news: Friday’s decision to exempt a suite of electronics from tariffs is only temporary, and new tariffs targeting semiconductors and electronics will be introduced in the next two months, U.S. Commerce Secretary Howard Lutnick announced yesterday.
- Last week’s reprieve spared U.S. tech giants like Apple the prospect of paying up to 145% in tariffs on made-in-China products imported to the U.S. The goods covered under the exemption accounted for over 20% of all U.S. imports from China last year.
- Adding yet another layer of confusion to the mix, Trump said yesterday that there was never any “exemption” announced and that electronics will still be hit with tariffs.
Why it matters: There’s arguably no company that’s more vulnerable to the U.S.-China trade spat than Apple. The more uncertainty that surrounds its supply chain in China (where it makes 87% of its iPhones), the more likely consumers are to see price hikes.
- According to one estimate, Trump’s push to have Apple make its iPhones in the U.S. could push the cost of the device up to US$3,500, more than triple what they cost now.
- While Apple has started making more products in other countries like India, Vietnam and Malaysia, experts have warned that moving manufacturing completely away from China would be borderline impossible for the company.
Bottom line: The White House’s tariff policy is as confusing and chaotic as ever — even if Apple and other electronics makers wind up getting an exemption, the uncertainty created by constant announcements and reversals will make business leaders think twice about any big investments.—LA