Donald Trump’s ongoing trade war with China might end up hurting Apple, America’s (and the world’s) largest corporation. Apple filed 15 different requests for tariff exclusions on July 18th. These are visible on the searchable, public docket of the Office of the US Trade Representative (USTR), here. (Type Apple in the “search text field” under Organization Name to see them).
These include requests for excluding the Magic Mouse 2 and Magic Trackpad 2. But most of the others are essential components for the upcoming Mac Pro. This is an important development considering that Apple moved production of the Mac Pro to China recently. A Shanghai-based factory run by Quanta is manufacturing the new Mac Pros, according to a Wall Street Journal report.
So Far, the Trump Administration has Spared Apple from the Trade War Fallout
The trade war with China has hurt many US companies with a manufacturing presence in that country. Tariffs would especially hurt Apple since millions of Apple products are manufactured in the east Asian country each year. However, recognizing Apple’s economic contribution, the US government has so far spared Apple products made in China from tariffs.
The logic behind this is easy to understand. Apple has a 47 percent share in the smartphone market in the US as of this year. Any tariffs on Apple products would impact nearly half of all Americans. The Mac Pro itself is a niche product and costly anyways. But a tariff could cause Apple to spread the cost among Macbook and iPhone users too.
Regarding the Mac Pro specifically, Apple’s tariff exclusion requests include requests to exclude the PSU, heatsink, logic board, and GPU among others. The reason Apple moved Mac Pro production to China was that component vendors were available nearby. This would make production costs lower than at their old Texas facility. However, tariffs would take away any price advantage the Shanghai location has.
Considering their stance in the past, we expect that the US government will approve of Apple’s exclusion requests. However, this doesn’t mean that the Mac Pro or other Apple products won’t be affected at all.
The Mac Pro is made of components sourced from dozens of vendors in China. Many of these may be hit by the tariffs themselves. This would force them to pass the cost increase on to Apple.
And even if the current US government stance is to exclude Apple from tariffs, there’s no saying this won’t change. The Trump administration has been anything but predictable and consistent. A few months ago, a mere tweet by Trump on the China trade war caused Apple shares to dip by 7 percent.
All in all, the future’s not looking great for Apple pricing. The new Mac Pro is already slated to launch at $6000. Tariffs–whether direct or indirect–will only serve to make things more expensive for consumers.