Donald Trump: Apple should make products in the USA to avoid tariffs

11 September, 2018, 12:16 | Author: Angel Logan
  • US President Donald Trump

Asian stocks were mostly lower on Thursday as the USA and China moved closer to imposing tariffs on billions of dollars of each other's goods, sounding a call of caution in the markets.

The chip maker points to a study from the trade group, the Consumer Technology Association, which estimates the proposed tariffs will increase prices for USA electronics by 6 percent.

The company told trade officials in a letter on Friday that the proposed tariffs would affect prices for a "wide range" of Apple products, including its watch.

Apple declined to comment beyond its filed statement.

"We can not simply shift our supply chains outside of China without massive disruption and cost increases due to materials availability, quality, compliance and capacity in other countries", said the letter, addressed to U.S. Trade Representative Robert Lighthizer. The company could theoretically absorb the cost of some of the tariffs, since it is the most valuable publicly traded company in the world and recently became the first $1 trillion USA company.

The President believes that the easiest way to mitigate this is to manufacture products in the US. However, he said looking to tariffs as a solution is generally unwise because of the amount of imported materials American companies rely on and supply chains that crisscross borders.

It is not immediately clear how Apple could pay no tax if it moved its manufacturing process to the US.

Apple does not disclose specific revenues for most of the affected products, but the Apple Watch may be the biggest seller.

The letter did not mention the iPhone, which accounted for about two-thirds of its US$229 billion in revenue in its most recent fiscal year. The Trump administration has held hearings on the next possible tranche of tariffs, and has now run the traps necessary to impose new tariffs on an additional $200 billion in Chinese imports.

Apple CEO Tim Cook didn't sound that concerned about the tariffs during the company's Q3 earnings call.

US-China trade row: What has happened so far? "It may take longer to figure out what the repercussions are, but the US will not be unscathed".

Wei Jianguo, former vice-minister of commerce, said the USA is handling relations with China in an extremely high-pressure and irrational manner. China, for its part, may be willing to endure short-term pain and see how the US midterms turn out.

New tariffs on Chinese imports could cause the price of computers and networking equipment to rise, costing consumers billions of dollars while slowing 5G network implementation, four major US tech companies say.

In its filing, Apple challenged that approach, writing that "it is hard to see how tariffs that hurt US companies and USA consumers will advance the Government's objectives with respect to China's technology policies".

Chinese leaders have rejected pressure to scale back plans for state-led development of global champions in robotics and other technologies.

"I would think that we will lose business to the Chinese competitors here in the USA and what I can see is that if our sales go down, there could be layoffs in our company", he said.

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