Looming trade wars are coming home to Apple with 15% tariff imposition from September 1, 2019. It may hit products like Apple Watch, AirPods, HomePod and several other products imported from China, and ultimately affecting its US consumers, says Bloomberg.
Following Presidential instructions, the latest United States Trade Representative (USTR) Federal Register Notification covers hundreds of other products, including Apple’s imported from China. It calls for import duties rising from 10 to 15 percent, in two tranches.
iPhone Awaits Tariffs As Trade Wars & Its Fallout Take Effect
The below products (which contributed about 10% of Apple’s 2018 revenues) feature in List 1 of the Federal Register Notification which will come in to effect from September 1, 2019, attracting 15% tariff.
Below Apple products featured in List 1 will get impacted:
- Apple Watch and Watch bands
- Some Beats headphones
- iMac computers
- Repair parts for iPhones may also be hit
- Nand flash, a key storage component for iPhones, could also be affected
Apple’s most popular iPhone (which contributed 50% of its 2018 revenues) and iPad among other List 2 items imported from China, will also attract tariffs with effect from December 25, 2019.
Incidentally, few Apple accessories that already attract import tax include power adapters, cases, and cables.
Bloomberg also quoted Gene Munster of Loup Ventures, who wrote in a note on Friday:
“The U.S. adding tariffs to any Apple product without some type of corresponding offset to mitigate the negative effects crosses the Rubicon on many dimensions. We believe the U.S. does not want to be the first to add tariffs to Apple, given Apple is arguably the leading U.S. company and the face of American business in China. The optics of a U.S. protectionist first approach penalizing a U.S. global leading company while China doesn’t penalize Apple would seem to surrender the moral high ground.”
The report hints at Apple hitting a hard ground post imposition of the 15% import duties. But, if we consider Ace Apple Analyst Kuo Ming Chi’s views, then Apple, with its smart moves, may conveniently absorb these import duties. Apple also seeks alternate sourcing destinations in order to circumvent the situation and also set up new manufacturing bases across geographies.
Meanwhile, Apple CEO Timothy Cook and US President Donald Trump have interacted several times over the tariff issues. In the latest one over dinner, Cook made compelling argument for tariff waiver reasoning company’s impact on contribution towards the progress of US economy.
Trump responded, calling Cook a Great Executive as he keeps calling him frequently, but results matter in the final analysis. And now, it seems all but lost for Apple as it may face tariffs impacting it revenues and shares, in the near future, at least.
For now, there’s no word from either side, but we now presume with time running out, the tariffs may soon be a reality which Apple may have to face. Whether it will load the additional cost on the US consumers is what matters most for all.
Are you ready to pay more for your Apple Watch or AirPod that you plan to purchase, come Monday? Should Trump rollback this notification raising the tariff to 15%?
We leave at that, but if you have an opinion of this do comment.