Published: Sun, September 09, 2018
Markets | By Terence Owen

Apple can avoid tariffs by shifting production to U.S.

Apple can avoid tariffs by shifting production to U.S.

In a Saturday morning tweet, Mr. Trump said that if Apple wants to avoid tariffs on its products, it should make those devices in the US rather than China.

President Trump called on Apple Inc.to shift production to the USA and out of China, reviving a longstanding criticism and pressuring the iPhone maker to help fulfill the administration's economic goal of restoring American manufacturing.

Trump has already imposed 25% tariffs on $50 billion worth of Chinese goods, mostly industrial machinery and intermediate electronics parts, including semiconductors.

Apple voiced its concerns about these tariffs in a public filing Friday, arguing that tariffs could make a wide range of products the company is selling to USA consumers more expensive.

The new $267 billion in tariffs would cover the value of all goods the Unites States buys from China, U.S. government data from previous year show.

President Donald Trump, surrounded by business leaders and administration officials, prepares to sign a memorandum on intellectual property tariffs on high-tech goods from China, at the White House in Washington, March 22, 2018.

White House Economic advisor Larry Kudlow told CNBC that talks between the US and China were ongoing.

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Apple did not disclose specific revenues for most of the affected products, but of those the Apple Watch may be the biggest seller. For gadget nerds, this seems like a sad and obvious conclusion to the spate of escalating tariffs that the United States and China have been slinging back and forth since Trump got all this started back in autumn.

This week, Apple said that a proposed new round of $200 billion in additional tariffs on Chinese imports would raise prices on some of its products, including the Apple Watch and the Mac mini.

Mr Trump has boasted that trade wars are "easy to win" and warned he would hit virtually all Chinese imports if Beijing does not back down and take steps to reduce its US$335 billion surplus with the US.

For January-August, China's trade surplus with the United States was $192.64 billion, compared with about $167.94 billion in the same period past year.

Still, Apple's business would no doubt face some serious headwinds due to possible tariffs, and Apple continued on to say: "Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower United States growth and competitiveness and higher prices for USA consumers".

"Semiconductors are America's fourth-largest export, and our industry has a global trade surplus of over $6 billion and a surplus with China of close to $2 billion in 2017", Intel's letter said. China's trade surplus with the US has, therefore, risen almost 15 percent from January to August 2018.

"That changes the equation", he added.

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