Upcoming 2019 Apple iPhones escape tariffs until mid-December

Upcoming 2019 Apple iPhones escape tariffs until mid-December
Back on August 1st, U.S. President Donald Trump disseminated a tweet announcing that another $300 billion of Chinese imports would be taxed at 10% starting on September 1st. This tier of products includes smartphones like the Apple iPhone, and other consumer electronics goods shipped to the states from China. Since the iPhone is designed in the U.S. but assembled in China, it is considered an import from that country and is subject to the tariffs. Since the latter is a tax that U.S. companies pay, Apple could decide to eat the entire cost of the tax, pass it on to consumers in the form of higher prices, or pay some of the additional cost and have consumers pay the remainder.

But it appears that the iPhone and other smartphones imported into the U.S. from China are getting a short-term reprieve. According to CNBC, the United States Trade Representative has announced this morning that certain items related to "health, safety, national security, and other factors" are being removed from the list of Chinese imports facing the 10% tariffs. And other products, including cell phones, won't have the 10% import tax imposed on them until December 15th. The U.S. Trade Representative said that this group receiving the reprieve includes "cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing."

UPDATE: 10% tariffs on the AirPods and the Apple Watch will start on September 1st as previously scheduled.

The short-lived truce in the trade war between the U.S. and China ended quite abruptly at the start of this month

So this means that unless things change again, the 2019 iPhone models won't face the additional 10% tax when they are first launched, most likely in the middle of next month. TF International analyst Ming-Chi Kuo, who always appears to have his finger on Apple's pulse, said that the company was planning to "absorb most of the additional costs" of the tariffs. Apple already picks up the cost of tariffs imposed on certain iPhone and iPad cases imported from China in order to keep the retail price the same.

It appeared that the iPhone was off the hook on June 29th when President Trump and his Chinese counterpart announced a truce in the trade war between the U.S. and China. Trump said that China agreed to buy "tremendous" amounts of U.S. agricultural products. Mr. Trump claims that the Chinese failed to live up to this agreement forcing him to announce the imposition of tariffs on the additional $300 billion worth of goods exported from China. However, the story from China is a bit different; they claim that Trump just decided to announce the additional 10% tariffs which caused the country to back out of the agreement to buy agricultural products from the states. Either way, the result is the same-escalation of this battle that appears likely to continue for some time.

Back in June, we passed along a report indicating that Apple was looking to move 30% of its production out of China. The company already produces some older models in India in order to evade Indian import taxes that could add as much as $100 to the cost of each unit. It also was expected to start manufacturing its 2018 line in India starting this month, although the number of phones expected to come off the assembly line will be far short of the number it turns out in China. Another possible location that could end up hosting iPhone production is Vietnam.

As you might imagine, moving factories and training workers is a time-consuming process. And working out the logistics of the supply chain also can't be done overnight. So for now, Apple continues to face the possibility of having to pay a tax on every iPhone it imports from China.



17. mootu

Posts: 1541; Member since: Mar 16, 2017

This is nothing but an election ploy from Trump. All along he has been spouting off that the US does not pay the tariffs but so far all tariffs have been on non consumer goods and has mainly been paid for by importers. The next round is ALL consumer goods and Americans will see who really is paying the tariffs. If Trump gives Americans a far more expensive christmas then it would cost him votes in the election.

14. oldskool50 unregistered

First of #45 doesnt understand how tariff's even work. The reason why China got such a good deal was, the bought over $1Trillion of the US debt. By doing this, the lowered the gap. Between the Chinese Yuan and the US Dollar. This allowed manufacturers to be able to ship millions of products from China for a very low rate. And since in many cases they are using Chinese owned factories, this is helping to improve their country. The US Govt is not directly paid from this money. 100% of that money is paid by 2 people. The first being the company who the good belong to, and you because they are going to increase product prices to cover it. It not just about Apple. At other OEMs like Samsung don't totally rely on China. They mostly just make the Chinese version of their phones and the ones that need to come to the US. But several companies have told this jerk how his trade war is effecting US businesses. But because they don't directly effect his, he doesnt care. He is a liar. A bigot, a hypocrite, an adulteress and more. He is trashing this country and if he gets 4 more years, he is gonna run us into the ground and him along with Putin are gonna use the world's largest military to hold the world hostage. We do need to get manufacturing back to the US, but this is the way. Give companies dome type of incentive that would lower their costs a bit providing they ship out millions if products. You need to earn you benefits. When we had manufacturing here the US was soaring to new heights. Then thanks to Repiblicans who are in these corpse pockets, got bribed into hurting US. I don't care about the corps, after all this is by their own doing. The issue is, the costs will be past on to me. Then since the most of us here are actually poor, since rich people make up less than 5% of this country; that means were gonna be flipping the bill. Every one of US should be standing against this. Because in the end we are all going to lose, regardless of which OEM you like.

15. tedkord

Posts: 17519; Member since: Jun 17, 2009

Trump doesn't understand how a seesaw works.

8. cmdacos

Posts: 4412; Member since: Nov 01, 2016

Trump is weak

6. oldskool50 unregistered

Timmy and Donald must be really good friends that Timmy was able to stall the tariffs until end of year. Wonder what Timmy did to get that favor from the Donald.

3. apple-rulz

Posts: 2198; Member since: Dec 27, 2016

sgodsell Apple is your life, you can’t even deny your intense obsession with all things Apple.

5. worldpeace

Posts: 3135; Member since: Apr 15, 2016

With that logic, you're also can't deny your intense obsession toward sgodsell. You show up wherever sgodsell make comment.

10. apple-rulz

Posts: 2198; Member since: Dec 27, 2016

And you showed up because I made a comment, so.......

11. sgodsell

Posts: 7659; Member since: Mar 16, 2013

Was I wrong for pointing out that this is a scare tactic to make people buy an iPhone before the holiday season? Because that's what it looks like to me. I am sure others would agree. Also Apple can say sorry but this is a hike on all our iPhones from China. However Apple pays for the manufacturing cost, and not the retail cost, which is so much higher. Please do tell Apple-foolz why are you so obsessed with me and the way I see things in regards to Apple.

16. apple-rulz

Posts: 2198; Member since: Dec 27, 2016

You come on to every Apple article with an inane long winded diatribe about how bad/greedy/stupid/evil the company is. It’s clear from the effort you put in that you are obsessed with Apple. If you REALLY were unhappy with Apple’s practices/products, you wouldn’t comment. Think about it.

18. midan

Posts: 3261; Member since: Oct 09, 2017

Great comment and i think we all can agree with this He even talks about Apple in Android articles which have zero mention about Apple

19. TBomb

Posts: 1750; Member since: Dec 28, 2012

Everyone in this thread has made a comment about a company that's not in the article at one point - no one here can point a finger. Even I have been guilty in my past. Everyone on this website has some form of an infatuation with either iOS, Android, an OEM or all of the above - that is why thye have an account. Everyone who gets in these little "my choice is better" battles comes with personal attacks where if you flip the name and company, is still true 99% of the time. Just think about that next time before you hit comment. You're not going to change someone's preference. You're not going to win a 100% subjective battle.

1. TBomb

Posts: 1750; Member since: Dec 28, 2012

I think this will actually increase iPhone sales for the holiday quarter. Fox/CNN is going to eat this article up come holiday time and people will feel pressured to buy one then even though they don't need one for another 6 months because of the uncertainty around the future price. Trump will be able to tout that he caused this huge jump in the already strong economy and spin it that China can't afford the iPhone and come next year election time, we can be sure that statistics and numbers will be thrown around the room - because who can't argue with statistics *eyeroll*.

2. sgodsell

Posts: 7659; Member since: Mar 16, 2013

It's a great ploy to scaring the public into buying an iPhone, thinking they will save money if they buy before the beginning of the holidays. "Get it now before the prices hike even higher, and you can save your money, now, before it's too late!" The gullible and foolish will lap that up. If it was a hidden secret that Apple makes little profit on its iPhones, then Apple might write off some of the tariffs, but this gives Apple the golden key to hike up prices again.

4. worldpeace

Posts: 3135; Member since: Apr 15, 2016

But their sales will drop greatly on the next quarter after that move.

7. lyndon420

Posts: 6935; Member since: Jul 11, 2012

Phones are already too expensive for what you get. It's highly possible that apple will absorb the costs...but we'll see I suppose...

9. mackan84

Posts: 710; Member since: Feb 13, 2014

I’m intrigued by this. I wonder how Apple will tackle this with the decline in sales and a pretty boring update coming in iPhones. They need something that brings some spotlight on them. Don’t think that Netflix-contender nor gaming service will fix that. They’ll bring something “new/must have” I bet, either software or hardware.

12. oldskool50 unregistered

What? If Apple chose to absorb the tariff, then the price wouldn't increase anyways and thus it would have zero effect on prices or sales. You would have to assume Apple wouldnt have absorb them and we cant assume that.

13. mackan84

Posts: 710; Member since: Feb 13, 2014

With both sales declining and tariffs starting in mid-December that will be a big hit in profit. They need to do something for their precious investors before that Q1 earnings call.

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