Despite what the US President Donald Trump tweeted last month, US tariffs on Chinese imports do not charge the US Treasury Department a penny. The tariffs are a tax on imports paid by US companies and decide whether to transfer costs to consumers. For example, Apple imports covers and covers for Chinese iPhones and iPads, and are taxed at 25% once they hit US soil. The company has decided to consume the tax on these accessories so that consumers do not pay more for them.
But the next level of products that could be affected by an import tax includes smartphones. Yes, Apple designs the iPhone in the U.S. But most of the units are assembled in China. This means that if the trade war between the U.S. and China intensifies, the iPhone will incur a 25% tax. An analyst has already discovered what could be the impact for Apple’s most popular model, the iPhone XR. According to Morgan Stanley analyst Katy Huberty, Apple could raise the price of the device by $160 if the US government imposes smartphone rates made in China. Apparently, Apple is trying to transfer up to 30% of its iPhone production out of the country.
In an attempt to persuade Trump not to add tariffs to the next level of Chinese exports, Apple has published comments on a government website saying that taxing the iPhone, iPad, and Mac will reduce the contributions of the company to the US economy. The company has also stated that additional tariffs will make the company less competitive all over the world. Other Apple products that may soon be affected by the rates include AirPods, AppleTV, batteries, and parts.
Apple And Huawei Will Closely Follow Trade Negotiations Between The U.S. And China
As trade talks between the two countries should resume soon, tensions are high in the smartphone industry. Any minor result of a new trade agreement will increase the current trade war and give Trump a reason to expand the tariff to cover another $300 billion of imported Chinese products in the U.S. Another company that is attentive to the talks in China. Huawei manufacturer. Although it was forbidden to obtain parts and software from the U.S. for some security reasons, the president suggested he could use Huawei as a commercial chip to obtain favorable terms in any trade deal. Both Trump and Chinese President Xi Jinping will meet at the G20 summit next week in Japan.
If Apple is forced to increase the prices of its devices due to tariffs, not only will American consumers be adversely affected, but also the US government. Apple is the largest corporate taxpayer in the U.S. and last year he said he would add $350 billion to the US economy over the time period of five years through various investments and expenses. Lower sales due to the import tax would eventually force Apple to reduce the size of this injection into the economy of the US. And since the iPhone is the best-selling smartphone in the U.S., tax on any product would help the company’s competitors, since its share in the U.S. is less to that of Apple.
The trade war was triggered by President Trump’s desire to reduce the US trade deficit with China. Many economists say the deficit simply means that American consumers have the money to buy more imports from China than what Chinese consumers have to buy products made in America. But Trump looked at the figure and compared it to the scoreboard to decide whether the United States was losing because the deficit was very high.
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