Bad news for Apple and those who buy the iPhone in the U.S. appeared in a series of tweets sent this afternoon by President Donald Trump. In the tweets, Trump said that starting on September 1st, a 10% tariff will be imposed on another $300 billion of Chinese imports including the iPhone. The tariffs are a tax paid by U.S. corporations on products imported from China. Apple, like other American firms impacted by the tariffs, can decide to eat the entire cost of the tax or pass it on to U.S. consumers in the form of higher prices.
But when a truce in the trade war was announced by President Trump on June 29th, the president said, "U.S. companies can sell their equipment to Huawei. We're talking about equipment where there's no great national security problem with it." But confusion has reigned and Huawei still cannot access its U.S. supply chain. And if the company is not being used as a bargaining chip by the U.S. to improve terms of a future trade agreement, Huawei will end up on the Entity List indefinitely.This is also bad news for Huawei. Back in May, the company was placed on the U.S. Commerce Department's Entity List for security reasons, preventing it from sourcing parts from the states.
Trump says that the Chinese have not purchased U.S. agricultural products as promised
According to NBC News, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin returned to Washington after attending U.S.-Chinese trade talks in Shanghai. While Trump characterized the talks as being "constructive," the meetings ended earlier than scheduled indicating that not much progress, if any, was made. The trade war was instigated by the president because of his thoughts on the U.S.-China trade deficit. Many economists say that the deficit indicates that U.S. consumers are better off financially than their Chinese counterparts and can afford to buy their exports. But Trump sees the deficit as numbers on a scoreboard and feels that it means that the U.S. is losing the trade game.
While the Apple iPhone is designed in the U.S., the product is actually assembled in China and shipped to the states. That makes it a Chinese export and subject to the tariff. Some cases for both the iPhone and iPad are already hit with the import tax, and Apple has decided not to pass on the additional costs of the tax to consumers.
Technically, it isn't just the iPhone that is included in the latest tier of Chinese imports. All smartphones imported into the U.S. from China will face the 10% tax as will other consumer electronics products. And no, the Chinese government does not pay one cent to the U.S. because of these tariffs. In fact, U.S. corporations and consumers are the ones most affected by this import tax. So when the cost of your next iPhone purchase goes up another 10%, you'll know the reason why.