Apple warns Trump: Tariffs on the iPhone will hurt the U.S. economy

Apple warns Trump: Tariffs on the iPhone will hurt the U.S. economy
Despite what U.S. President Donald Trump tweeted last month, the tariffs imposed by the U.S. on Chinese imports do not result in China paying one penny to the U.S. Treasury Department. Tariffs are an import tax that U.S. corporations pay and they decide whether to pass along the costs to consumers. For example, Apple imports cases and covers for the iPhone and iPad from China, and they are taxed at 25% once they hit U.S. soil. The company has decided to eat the tax on these accessories so that consumers don't pay any more for them.

But the next tier of products that could be hit with an import tax reportedly includes smartphones. Yes, Apple designs the iPhone in the U.S., but the majority of units are assembled in China. That means that if the U.S.-China trade war escalates, the iPhone will be hit with a 25% tax. One analyst has already figured out what the impact could be for Apple's most popular model, the iPhone XR. According to Morgan Stanley analyst Katy Huberty, Apple could raise the price of the device by $160 if the U.S. government imposes tariffs on smartphones made in China. Apple is apparently looking to move as much as 30% of its iPhone production out of the country.

According to Reuters, in an effort to persuade Trump not to add tariffs on the next tier of Chinese exports, Apple posted comments on a government website saying that taxing the iPhone, iPad and the Mac will reduce the company's contributions to the U.S. economy. The company also stated that additional tariffs will also make the company less competitive globally. Other Apple products that could soon be hit by the tariffs include the AirPods, AppleTV, batteries, and parts.

Apple and Huawei will both watch U.S.-China trade talks very intently

With trade talks between the two countries expected to restart soon, tensions are high in the smartphone industry. Any result less than a new trade agreement is sure to escalate the current trade-war and give Trump a reason to expand the tariff to cover another $300 billion of  Chinese goods imported into the U.S. Another company intently keeping on an eye on the talks is Chinese manufacturer Huawei. While banned from obtaining U.S. parts and software for security reasons, the president has hinted that he could use Huawei as a bargaining chip in order to obtain favorable terms in any trade agreement. Both Trump and Chinese president Xi Jinping will meet at the G20 summit to be held next week in Japan.

If Apple is forced to raise the prices of its devices due to the tariffs, not only will U.S. consumers be negatively affected, the U.S. government will be too. Apple is the largest corporate taxpayer in the U.S. and last year it said that it would add $350 billion to the U.S. economy over five years through various investments and expenditures. Lower sales due to the import tax would force Apple to reduce the size of this injection into the U.S. economy. And because the iPhone is the top selling smartphone in the states, any tax on the product would help the company's competitors since their share in the U.S. is lower than Apple's. "A U.S. tariff would, therefore, tilt the playing field in favor of our global competitors," Apple says.

The trade war was brought about by President Trump's desire to shrink the U.S. trade deficit with China. Many economists say that the deficit merely means that U.S. consumers have the money to purchase more imports from China compared to what Chinese consumers have to buy American made products. But Trump looked at the figure and compared it to a scoreboard, deciding that the U.S. was losing because the deficit was so high.



1. JCASS889 unregistered

Or Apple could just be a good guy and take the small hit to their enormous profit margin, complaining that it will take some money away when you have hundreds of billions in cash is such a greedy way to go.

10. Mike88

Posts: 438; Member since: Mar 05, 2019

An anti US president in a nationalist disguise,, it's happening in many parts of the world and Google is part of it but trust me it won't work in America for long,, you are gone dude

17. mackan84

Posts: 679; Member since: Feb 13, 2014

Try to explain that one to investors...

2. djcody

Posts: 239; Member since: Apr 17, 2013

Let me translate it to you. Stockholders start crying about lower profits and their bonuses, guess what you're not whole economy deal with it. Some casualties going to happen for good to a people on the bottom.

3. Larry_ThaGr81

Posts: 593; Member since: May 26, 2011

It will only hurt Apple consumers and I definitely can live with that outcome.

15. domfonusr

Posts: 1101; Member since: Jan 17, 2014

Apple is not the only OEM that manufactures its phones in China, so how is Apple going to be the only OEM hurt by this? Plenty of Android OEM's make their phones in China, too, and I have no doubt they will be affected by tariffs as well. If the tariff is 25%, then the average selling price of a new mobile phone in the US will probably rise by somewhere between 10 to 20% for the average US consumer of new mobile phones, depending on how generous OEM's may or may not be in absorbing the added costs...

34. Larry_ThaGr81

Posts: 593; Member since: May 26, 2011

I said "it will only hurt Apple consumers." I definitely didn't say that it would hurt Apple. Please feel free to read the post again. Apple will be upset with the government for imposing the tariff to begin with and inconveniencing Apple. As a result Apple will add an additional 5% to the 25% tariff when they sale future devices to their consumers. It's the perfect opportunity for Apple to add an additional increase on to the price of their future devices and blame it all on the government.

4. Panzer

Posts: 283; Member since: May 13, 2016

They should be able to take a hit on the iPhones. I am assuming those 1k monitor stands are flying of shelf to make up the difference.

8. dvlprr

Posts: 70; Member since: May 08, 2019

The stand isn't out yet.

11. iloveapps

Posts: 909; Member since: Mar 21, 2019

The stand for sure will last 10,000 years while Sammy’s Fold barely last 2 days and to think its twice the price. Greedy! Their selling millions of cheap phones, its plan of obsolescence. Android tend to trash their phones every year. Not good in environment.

18. Atrixboyyy

Posts: 621; Member since: Nov 03, 2011

Are you really comparing the price of a phone to a metal monitor stand that does nothing else? (You do know the xs Max is close to $1500+ outright... right?) Regardless of the device that's a bit ridiculous but I see by your comment how in touch with reality you are.

22. vgking9699

Posts: 227; Member since: Mar 01, 2019

And you realize that Samsung still charges more for a old as galaxy tab s2 than a new 2018 iPad cost lol

26. sissy246

Posts: 7129; Member since: Mar 04, 2015

LMFAO peaceboy You just have no clue.

5. OneLove123

Posts: 1290; Member since: Aug 28, 2018

It won't hurt me one bit, Apple.

6. Vokilam

Posts: 1437; Member since: Mar 15, 2018

For the greater good of US economy - I’m with Trump. If the iPhone cost me little extra - oh well. Every president before that kicked this can down the road to far. Time to get things done!

7. TheOracle1

Posts: 2340; Member since: May 04, 2015

That's because you and Drump don't understand international trade and economics. No one is disputing the goal, it's the misinformed method he's using.

12. Vokilam

Posts: 1437; Member since: Mar 15, 2018

I’m gonna guess you are running an international business that also deals with China, and you have been briefed continuously on economic trade agreements with China for the past couple of yours - because that would make you as informed as “Drump”. And now we can take your analysis over that of what “Drump” is doing!

24. TheOracle1

Posts: 2340; Member since: May 04, 2015

No I went to business school and I run my own business. Your comment shows your ignorance and gullibility.

28. superguy

Posts: 473; Member since: Jul 15, 2011

A lot of other people have been to business school too and disagree with you chief. That doesn't make you an authority. And define business school. That could mean anything from getting a certificate or a two year degree from a "business college" or post grad studies resulting in a masters or doctorate. Given you didn't claim to have an MBA or a doctorate, I'm willing to bet on the former, and that means little weight for your opinion. Bottom line is the media has said everything Trump does is gloom and doom, and in many cases, the opposite has happened. The Chinese have been screwing us over for years. If we end up finding better trading partners because of this, I'd say it's a net win.

9. Back_from_beyond

Posts: 1484; Member since: Sep 04, 2015

Your entire comment shows a clear lack of understanding of the subject matter, much like Trump doesn't understand it.

13. Vokilam

Posts: 1437; Member since: Mar 15, 2018

Read post #12 above.

14. Back_from_beyond

Posts: 1484; Member since: Sep 04, 2015

Trump is a business moron up to his eyeballs in foreign debts he can't pay. If he had to run his own businesses he'd be bankrupt in a year, which would be the 7th time or so.

16. domfonusr

Posts: 1101; Member since: Jan 17, 2014

I've also heard repeatedly all over the news that Trump is 'the' evil-genius "Dictator of America". So which one is it? Evil-genius dictator, or "business moron"? I'm tired of listening to people, including most of my friends and family, who think they can have it both ways. Either he's "a genius", or he's "a moron"... he can't be both at the same time just to suit someone's cherry-picked and diametrically-opposed political talking points.

19. mackan84

Posts: 679; Member since: Feb 13, 2014

It’s “evil moron”. If daddy hadn’t saved spoiled little Donald he would’ve never existed in our minds. When he couldn’t do business right he gave himself fame with the money which led him to where he is now, I’ll give him that.

27. domfonusr

Posts: 1101; Member since: Jan 17, 2014

It goes both ways, at the same time... On CNN, NPR, and other mostly-liberal media sites that I listen to, Trump is decried as both an "evil mastermind" and "a complete moron" in almost the same breath. On FOX, and the small handful of mostly-conservative media sites that aren't absolutely off-the-deep-end, Trump is, at times, celebrated as either the "stable genius" he proclaimed himself to be, or, in the opinion of Greg Gutfeld, he gets the "Joker" treatment as "the junk yard dog that chases every car, but if he ever caught one, he wouldn't know what to do with it." Both sides are engaged in this "mastermind-and-moron" nonsense, and it kills me! It can't be both all the time... that's impossible. Sure, maybe Trump has some areas where he is a "mastermind", and some areas where he is a "moron", but he can't be both at the same time in the same area of speciality all the time, like both sides of the media paint him to be.

29. superguy

Posts: 473; Member since: Jul 15, 2011

Daddy didn't set him up nearly as much as people claim. Additionally, the "spoiling" applies equally to both parties as many presidents and politicians have come from wealthy and connected families that were able to skirt things and have advantages because of who they were. Take a look at JFK's power broker father Joe Kennedy, Bill "I didn't inhale and dodged the draft in England" Clinton, Woodrow "my dad owned slaves" Wilson, and both Teddy and Franklin D. Roosevelt (cousins from very wealthy families). How many of them would have been as successful - or even president - if they didn't have their powerful families backing them?

25. mootu

Posts: 1541; Member since: Mar 16, 2017

"For the greater good of US economy - I’m with Trump. If the iPhone cost me little extra - oh well. Every president before that kicked this can down the road to far. Time to get things done!". Trump supposedly introduced the tarrifs to reduce the deficit with China and yet in the last 12 months the deficit has actually grown by another $40 billion to over $419.2 billion. No Chinese company has paid a single cent to the US economy, it's all paid for by US importers and the US consumer. Hardly working well is it?, but as Trump famously said "trade wars are easy to win".

30. superguy

Posts: 473; Member since: Jul 15, 2011

The point of tariffs is to make the prices of foreign goods less attractive. In theory, a 25% tariff would raise the price of a Chinese good 25% over the cost of an American, Korean, etc good. So given the vast price difference, the Chinese sales should decrease over time. You're right that it won't be China paying a cent of the tariff, but they should be receiving less in profits as people choose other goods. So they "pay" that way. Tariffs do have a place in economic policy. Take a look at the steel industry. Foreign companies were dumping steel at extremely cheap prices that decimated our steel industry. I grew up in a steel town - or what was once one - and saw the effects of that first hand. US Steel and Bethlehem shut down, and the mines that supported them went down the tubes. My hometown is a crap hole now with little industry and opportunity. Had the government imposed tariffs to stop the dumping, things would likely be a lot different now.

32. Back_from_beyond

Posts: 1484; Member since: Sep 04, 2015

The big problem with the tariffs though is that it might result in less import from China, but will also lead to drastic inflation in the US. Cheap foreign steel allows for cheaper products to be made with said steel. Starting up production locally again, hiring personnel and everything that comes with it, costs much more than continuing to rely on foreign steel. And just with increased tariffs, the American consumer pays for it all. It may all seem nice in paper, sound nicely patriotic as slogans for a rally, but the reality is that the long term consequences are likely to cripple the economy. Whatever jobs are temporarily gained will be lost 5 times over. That's a picture Trump doesn't paint to his voters, it's all fake news.

20. darkkjedii

Posts: 31749; Member since: Feb 05, 2011

That stupid orange idiot won’t listen.

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