Carrying out a threat that’s been in the works since July, President Donald Trump today formally announced the imposition of tariffs on an additional roughly $200 billion in Chinese goods — the latest escalation in his trade war with China. But the tariffs notably omit one category of products that was expected to create holiday sales issues for Apple and rivals in the nascent wearable electronics space.
With today’s action, the U.S. has raised tariffs on nearly half of all Chinese goods imported into the country, including $50 billion worth of primarily industrial products, and now another $200 billion in industrial and consumer goods. China has said that it will retaliate for the tariffs with its own taxes on U.S.-made products, and state-controlled media has threatened regulatory actions and other consequences for U.S. businesses. In response, Trump said he would “immediately” place tariffs on an additional $267 billion of imports “if China takes retaliatory action against our farmers or other industries.”
Although the new U.S. tariffs are supposed to be targeting the Chinese government’s trade policies, they also indirectly penalize U.S. companies and consumers. Many products sold in the U.S., including everything from electronics to presidential memorabilia, are manufactured in China.
Trump originally threatened a new 10 percent tariff across multiple categories of Chinese-made goods, including an obscure category of imports called “data transmission machines” that would cover certain Apple, Fitbit, and Sonos products. He later escalated the threatened tax to a whopping 25 percent, matching a tariff previously levied on Chinese steel. However, the number subsequently returned to 10 percent — starting next week. But it will climb to 25 percent on January 1, 2019.
Until today, the new tariff was expected to cover Apple products, including the Apple Watch and AirPods, as well as the Mac mini, HomePod, and other Apple accessories. Apple raised prices by around 20 percent on the latest Apple Watch models announced last week, though it’s unclear whether the change was in preparation for possible tariffs or unrelated. Just ahead of the U.S. government’s official announcement, Bloomberg reported that the data transmission machines category had been removed from the tariff list.
The new tariffs have been decried by U.S. business associations and businesses because of the impact these tariffs are expected to have on the prices of consumer goods, and Apple sent a letter to U.S. Trade Representative Robert Lighthizer warning of their expected impact on the company‘s competitiveness. Soon thereafter, Trump responded by tweeting that Apple and other concerned companies could avoid tariffs by building their products in the United States. That was clearly only one option; the category mysteriously disappeared from the list just before the tariffs were formalized.
Under the worst circumstances, Trump has threatened to tax virtually every product imported from China — a position he believes the United States could take without full reciprocity, because China can’t penalize as many products in return: U.S. imports from China are much more numerous than Chinese imports from the U.S. However, continuation of the current tariffs, as well as the Chinese government’s ability to delay or otherwise hinder U.S. companies, could have a major impact on the U.S. economy.