Apple says China tariffs would hit Apple Watch, Air Pods

Gladys Abbott
September 8, 2018

Investors fear Washington could impose duties on another US$200 billion of Chinese imports at any time, in what would be its most sweeping measures yet, and Beijing has vowed to once again retaliate.

Trump's threat to escalate USA tariffs on Chinese imports contributed to a decline on Wall Street, with stock index futures dropping on concern that companies and workers would likely endure some financial pain.

The Trump administration has already slapped duties on US$50 billion of Chinese exports since July, which spurred immediate in-kind retaliation from Beijing.

Many American companies that rely on targeted Chinese imports are bracing for the next round of tariffs to hit, with some wondering whether they can absorb the higher costs or instead will need to pass them along to their customers - or find alternatives suppliers outside China.

"Because all tariffs ultimately show up as a tax on USA consumers, they will increase the cost of Apple products that our customers have come to rely on in their daily lives", the company said.

Hours after a public comment period closed on his $200 billion China tariff list, Trump told reporters aboard Air Force One that he was "being strong on China because I have to be".

Last night Apple warned that the threatened tariffs would hit "a wide range of Apple..." It said in a late submission that its AirPods headphones, some of Apple's Beats headphones, and its new HomePod smart speaker would face levies, causing its shares to slip in late trading.

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Apple's letter also made no mention of the iPad, which brought in $19.2bn in sales in the most recent year, or most of its Mac computers, which generated $25.8bn.

Retailers had successfully kept high-profile consumer electronics such as mobile phones and television sets off of previous tariff lists. But David French, a top lobbyist for the National Retail Federation, whose members include Amazon.com, BJ's Wholesale Club and Macy's, said almost every consumer good could be affected if Trump follows through on all threatened tariffs.

"We know that the President has received reports that the Chinese economy is struggling - reports that we believe are overstated - and thus he may believe that additional pressure might be effective in the short-term", Allen said.

In short, the White House is mulling slapping tariffs on $200bn of Chinese kit imported into the States - and the Command-in-Chief is suggesting ballooning that figure to $467bn. China has threatened retaliation, which could include action against United States companies operating there.

White House economic adviser Larry Kudlow just hours before said talks with Beijing were continuing to try to defuse the conflict, and that he was hopeful that a solution could be found.

"If [China] wants to continue that kind of model which is based on intellectual property theft, how does it back away from that because that's where a lot of its growth comes from", he said.

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