In January, we predicted that Trump’s proposed tariffs on Chinese imports could drive up the price of your gadgets. Yesterday, however, a New York Times report claimed that the Trump administration will not place tariffs on iPhones assembled in China.
But today, Peter Navarro, White-House trade advisor and director of the White House National Trade Council, told CNBC that he has no knowledge of an iPhone exemption in Chinese tariffs. This casts doubt on previous reports and means Apple could, once again, be in trouble. Credit: Getty
It’s hard to know how exactly such a tariff would impact consumer prices. Navarro believes that the 10 percent tariff level (as of the White House’s last statement) won’t have a huge impact on the price for consumers. Still, Apple has a large Chinese consumer base and manufacturing infrastructure, and Tim Cook’s past efforts to prevent such actions by the administrations suggest they could have notable consequences for the company.
Apple has 41 stores in China, and has sold hundreds of millions of iPhones there. That’s a small amount compared to its presence in some countries (Apple has opened 272 retail stores in the U.S. since May 2001) but it’s still solidified Apple as a major technology player.
While Apple’s sales saw a decline early this year, the company still remains the fifth-from-top smartphone manufacturer in the region, losing turf only to domestic players including Huawei, Vivo, Oppo, and Xiaomi. And Apple’s business in China garners an annual revenue of around $50 billion per year, which is just under a quarter of what the company takes in worldwide.
Last month, the Apple CEO visited the White House to warn the President that his trade war could threaten Apple’s business in the region. And in March, he called for “calmer heads” between the two countries, according to the Times.
And even if the tariff doesn’t significantly harm Apple’s bottom line, the company still fears that the trade war will. The Times also reported that anonymous sources close to Apple claim the company worries China will “retaliate in ways that hamstring its business.” Increased scrutiny from the Chinese government, for example, could also increase the time and resources necessary to manufacture an iPhone.