After sliding 2% on the day ahead of an imminent announcement of $200BN in new China tariffs which would hit tech companies hard, Apple stock rebounded from session lows following a Bloomberg report that the Trump administration would spare a category of high-tech products that includes the Apple Watch and AirPods headphone from the next round of tariffs it’s imposing on Chinese goods.
As reported over the weekend, the US government is expected to release as soon as today the final list of as much as $200 billion of Chinese products that will be slapped with a new 10% tariff (below the 25% contemplated previously). However, a product code that covers Apple Inc.’s Watch and AirPods – as well as similar smart watches, fitness trackers and other goods made by competitors – was removed from the final list, Bloomberg sources said.
The product code, which covers wireless devices, was included on a preliminary list the administration released in July. Other Apple products under the code include the HomePod speaker, BeatsWL headphones, and AirPort and Time Capsule internet routers, and the total value of such imports from China is about $12 billion.
The removal of the category from the sanctions list follows a complaint letter by Apple earlier this month, according to which a “wide range”of its products would be hit by the proposed tariffs. The company didn’t identify the iPhone as a product that would be subject to duties in a Sept. 5 letter to U.S. Trade Representative Robert Lighthizer.
“Tariffs increase the cost of our U.S. operations, divert our resources, and disadvantage Apple compared to foreign competitors. More broadly, tariffs will lead to higher U.S. consumer prices, lower overall U.S. economic growth, and other unintended economic consequences.”
What prompted the change? Probably this: in late August, Apple CEO Tim Cook dined with President Donald Trump and his wife, Melania, at Trump’s Bedminster, New Jersey golf resort. He said he hopes “calm heads prevail” in the trade conflict between the U.S. and China. The company’s sprawling production chain is centered in China.
