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Trump’s 25% Tariffs Will Likely Affect Apple iPhones Starting January 1

tim cook and donald trump

These are only my opinions, and not the representation of Saintel Daily, LLC.

As you might have guessed, President Donald Trump’s battle with China may end up hurting your next iPhone purchase.  Why?  Apple designs the iPhones here in the United States, but the devices themselves are assembled in China.  In the past, these devices have avoided any added fees, but now Trump has it in his head that he may put fees on Apple’s devices.  In fact, he made the following statement to the Wall Street Journal earlier this week:

“Maybe. Maybe. Depends on what the rate is. I mean, I can make it 10 percent, and people could stand that very easily.”

That sounds a bit childish, doesn’t it?  I mean, he doesn’t have a reason to put these fees on the devices, nor does he even really know what rate he would apply.  If he had any kind of sound logic behind this decision, I think we would be having a completely different conversation.

The Office of the US Trade Representative in June said that $50 billion worth of Chinese goods with “industrially significant technologies” will be subject to 25 percent tariffs starting Jan. 1. More than 1,100 types of products will be affected, but the US government specifically excluded “goods commonly purchased by American consumers such as cellular telephones or televisions.”  Meaning iPhones would be exempt.

In addition, Trump told the Wall Street Journal that he plans to move ahead with 25% tariffs – a significant boost from the current level of 10%.  The Chinese government has asked the US to delay the start of the tariffs. But why is he doing this?  Well, there are a couple of theories around this.  One is that Trump doesn’t like Apple for some reason. Which may or may not be true, but as the President of the United States of America, you can’t let your own personal grudges or feelings get in the way of doing good business.

Which brings me to the second theory or rationale – Trump wants everything to be made in America.  And while I can certainly support limiting certain imports – like certain foods, we now live in a world where getting goods from other countries is how we do business.  Stopping this now is going to clog the engine that is international trade.  And that could have major repercussions for the United States.

All that said, in June, Apple’s major manufacturer – Foxconn – broke ground on a new $10 billion manufacturing plant in Mount Pleasant, Wisconsin.  Foxconn is a Chinese company and will produce LCD displays in that facility. So that’s ok?  It’s ok for a Chinese company to open up shop in America, so long as it employs Americans?  I’m not arguing with the placement of the plant, but I am shaking my head at Trump’s logic.

Since November 1, Apple’s stock has fallen 21%.  The decline means that Apple is no longer worth more than one trillion dollars – which it had reached in August.  After the Wall Street Journal report was released, its stock dropped another 1.8% to $171.45.  Maybe Trump is just jealous that Apple was worth one trillion dollars?