Apple says Trump’s proposed China tariffs will boost product prices

Bloomberg

Apple Inc., the world’s most valuable company, said proposed U.S. tariffs on $200 billion worth of products imported from China will raise prices for some of its popular consumer goods such as the Apple Watch and AirPods headphones.

The Mac mini desktop computer, Apple Pencil stylus accessory for iPads, various chargers and adapters, and tooling equipment used to manufacturer and design some products in the U.S. will also be affected, the Cupertino, California-based company told the Office of U.S. Trade Representative in a letter dated Sept. 5.

The U.S. has imposed $50 billion worth of tariffs on Chinese goods with another $200 billion in the final stages. The public had until Thursday to comment on the administration’s plan. U.S. President Donald Trump said Friday he is considering another $267 billion of tariffs on China, which analysts said will affect virtually every category of consumer goods, to retaliate against what he calls unfair trade practices.

“Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers,” Apple said in its letter.

The company said the tariffs would “show up as a tax on U.S. consumers” and “increase the cost of Apple products that our customers have come to rely on in their daily lives.” Apple Chief Executive Officer Tim Cook earlier this year told Trump tariffs “were not the right approach.”

Intel Corp., the world’s second-largest chipmaker, weighed in supporting Apple’s opposition to the tariffs and broadening the argument. Computer and phone makers are involved in a global supply chain that includes Chinese manufacturing, and that can’t be easily excluded without harm to U.S. companies, Intel said in a letter to the trade representative. America’s ability to continue to dominate telecommunications technology, including the upcoming fifth-generation phone networks, will be hampered by the levy on imports from China.

In addition, the chip industry is a source of trade surplus for the U.S., including with China, Intel argued.

Apple, in pushing back on the tariff proposal, said it bought more than $50 billion worth of components from U.S.-based suppliers last year and that it’s the largest U.S. corporate tax payer. It also said that every Apple product “contains parts or materials from the United States and is made with equipment from U.S.-based suppliers.” Earlier this year, the company said that as part of tax reform it would spend $350 billion in the U.S. over the next five years.

Apple generated $9.6 billion in sales in China in the fiscal third quarter, accounting for 18 percent of its total revenue in the period.