November 22, 2024
Apple Says Tariffs on China Will Lead to Higher Prices for Apple Watch, AirPods, More

Apple Says Tariffs on China Will Lead to Higher Prices for Apple Watch, AirPods, More

Posted September 8, 2018 at 2:56am by iClarified
In a letter to U.S. Trade Representative Robert Lightlizer, Apple says that the proposed tariffs on $200 billion in imports from China will affect many of its products and lead to higher prices for consumers.

Last year, the U.S. had a massive $376 billion trade deficit with China. In May, the Trump Administration announced tariffs on $50 billion in goods "as an initial step toward bringing balance to our trade relationship". China responded by matching those tariffs, leading to a U.S. proposed tariff of 10% on $200 billion in Chinese exports. That has since been escalated to 25%.

Apple argues against the tariffs claiming that "the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers".


First, given the balance of Apple's economic footprint, the burden of the proposed tariffs will fall much more heavily on the United States than on China. The traditional method of calculating the U.S. trade balance attributes the entire value of our products to the country where final assembly is located, in most cases China. That calculation, however, does not reflect the immense value that Apple generates in, and returns to, the United States.

After the first round of tariffs, China's stock market had plunged around 25% while the U.S. S&P 500 neared a fresh record. Despite this, CNBC notes that Chinese President Xi Jinping doesn't care about political pressure from his population. Earlier this year, China's parliament passed a constitutional amendment that removes presidential term limits, letting him stay in office indefinitely.

In a report earlier today, CNBC notes that with its huge profits, Apple could absorb the increased costs.

In theory, Apple's impressive margins, profit and cash flow could let it absorb some of the increased cost. Last quarter, the company earned $11.5 billion on sales of $53.3 billion, and reported more than $243 billion in cash and equivalents. It is the most valuable publicly traded company in the world with a market cap that surpassed $1 trillion in early August. The company posts annual revenue north of $200 billion and has pulled in more money than Wall Street has expected for 21 of the last 22 quarters.


Unfortunately, it appears as though Apple plans to pass any extra costs of doing business in China on to its customers.

"All tariffs ultimately show up as a tax on U.S. consumers, they will increase the cost of Apple products that our customers have come to rely on in their daily lives."

Apple specifically points to the Apple Watch as being an item subject to the proposed tariffs but also lists the following items: AirPods, HomePod, BeatsWL, AirPort, Time Capsule; Mac Mini; Apple Magic Mouse and Trackpad, Apple Pencil; Apple adapters, charges, cables and cords; Apple leather covers and cases for iPhone, iPad, MacBook and Apple Pencil.

You can read Apple's full letter below...

Read More


Apple Says Tariffs on China Will Lead to Higher Prices for Apple Watch, AirPods, More

Apple Says Tariffs on China Will Lead to Higher Prices for Apple Watch, AirPods, More

Apple Says Tariffs on China Will Lead to Higher Prices for Apple Watch, AirPods, More

Apple Says Tariffs on China Will Lead to Higher Prices for Apple Watch, AirPods, More
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Comments (10)
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Fredward Bureau russell
Fredward Bureau russell - September 9, 2018 at 2:29pm
Apple is the only company worldwide to be 100% renewable energy the only company in the world to make all their products out of 100% recycled material
Fredward Bureau russell
Fredward Bureau russell - September 9, 2018 at 2:30pm
Tim Cook is the only openly gay CEO that I know of let alone one who fights for the rights of everyone
1reader
1reader - September 8, 2018 at 6:42pm
They care about: -“pride month”, -help to find cure for AIDS, -some small donations when it comes to hurricanes or tornadoes and immigration.
1reader
1reader - September 8, 2018 at 6:43pm
Forgot: -bottom line
joeyxxx
joeyxxx - September 9, 2018 at 8:11pm
All useless, useless things.
fastandloose
fastandloose - September 8, 2018 at 4:07pm
Exactly my thoughts Designed in America Built in America Apple it’s time to bring the jobs back to the Americans
Ace*
Ace* - September 8, 2018 at 11:44pm
Apple has the money to make it happen? Lol. The very reason why Apple had the money to make it happen is because they do NOT make that happen. They take advantage of financial breaks like this and save/make billions.
joeyxxx
joeyxxx - September 9, 2018 at 8:12pm
It’s time for their margins to drop.
ichild
ichild - September 8, 2018 at 12:40pm
Just for the record just remember people that apple pays Chinese people next to nothing to make these things to make high profits so do the math. China have to pay, period now is time to show your power people do not buy if apple raises there prices.
joeyxxx
joeyxxx - September 9, 2018 at 8:13pm
Agreed! Pretty much the only issue I’d switch to Android over.
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