1 week Ago By David Richards
Smartphones, laptops, and other products that are exempt from Trump’s April 9th tariffs will be lumped in with duties on semiconductors in “a month or two,” Commerce Secretary Howard Lutnick has admitted with the move set to hurt Apple whose business is struggling to find growth and a safe haven to manufacture goods. After the recent US administrations updated guidance that excluded smartphones, laptops, and more from Trump’s new tariffs, including the 125 percent additional levy on Chinese-produced goods it’s now been revealed that their latest halt is temporary. “This is not like a permanent sort of exemption,” Lutnick told a US media organisation, saying that they will be subject later to “a special focus type of tariff” applied to the semiconductor industry, similar to automotive tariffs Trump has already issued.
Prior to the temporary halt Donald Trump’s 125% tariffs on goods produced in China was another blow that was affecting Apple whose sales of iPhones and Mac PCs was slowing. Another win: The 10% tariff on goods imported from other countries has been dropped for those products. While a new, lower tariff may still come on goods that have semiconductors, the 20% tariff on China sourced goods remains.
Before the latest exemption, the iPhone maker had a plan to adjust its supply chain to make more US-bound iPhones in India, which would have been subject to far lower levies. The iPhone is Apple’s biggest revenue generator with 87% of them are produced in China, according to estimates from Morgan Stanley. About four in five iPads also are made in the country, along with 60% of Macs.
Altogether, those products are responsible for about 75% of Apple’s annual revenue. Currently Apple builds nearly all of its Apple Watches and AirPods in Vietnam. Some iPads and Macs are also manufactured in that country, and Mac production is expanding in Malaysia and Thailand.
The company generates about 38% of its iPad sales in the US, as well as about half its Mac, Apple Watch and AirPods revenue, Morgan Stanley estimates. Bloomberg claims that ‘Given that the iPhone facilities in India are on pace to produce more than 30 million iPhones per year, manufacturing from that country alone could have fulfilled a fair chunk of American demand. Apple, these days, sells about 220 million to 230 million iPhones annually, with about a third of those going to the US’.
The problem Apple was facing was that a shift to India would be difficult to pull off as many of the components came from China which in the future will still face high tariffs. Currently in production is the iPhone 17, which will be made primarily in China with the real possibility that a September launch of the new Apple offering could see a record price for an iPhone. Apple’s operations, finance and marketing departments, are currently facing a dilemma as they attempt to move iPhone 17 production to India or elsewhere.
Analysts claim that Apple will most likely would have had to increase prices globally to recover the cost of US tariffs on the business. Then there is the issue of having to convince consumers that they have to pay a higher price for an iPhone that’s not necessarily superior to a top end Samsung offering. As for the backflip by the US administration at the weekend, Chinese Ministry of Commerce called the move “a small step by the US toward correcting its wrongful action of unilateral ‘reciprocal tariffs’, and urged the US to “take a big stride in completely abolishing the wrongful action, and return to the correct path of resolving differences through equal dialog based on mutual respect.
” This appears to not be part of Trumps plan, with smartphones other electronic devices set to subject to a new levy on semiconductors, according to US Commerce Secretary Howard Lutnick. Lutnick signalled that the weekend reprieve — exempting a range of electronics from 125% tariffs on China and a 10% flat rate around the globe — was temporary, and reiterated Trump’s longstanding plan to apply a different, specific levy to the sector. Recently China launched competition inquiries into US companies according to Bloomberg that could create issues for Apple through its own customs process.
In recent years, it has also banned iPhones, among other US-designed devices, from its legion of government workers. That followed a US crackdown on Chinese tech champion Huawei Technologies. Currently Trump is pushing Apple to make iPhones in the US, however lack of domestic production and cheap labour is a problem for Apple.
The size and scale of the facilities in China makes it unmatched in speed and efficiency. The China production also is crucial for Apple’s sales in the world beyond the US with the Company generating 60% of its revenue outside of the US. When Lutnick was asked about the impact on Apple he said ”It’s not like you can open a factory tomorrow to build iPhones,” Karl said, before asking if these coming tariffs will mean higher prices for goods in the US.
“I don’t necessarily think so. I think the idea is that we can manufacture here in America. As I said, there’s a Panasonic, the battery company.
Right? A Japanese company. They built an amazing factory in Kansas, which they’re opening now. They were putting it in the ground when Donald Trump was President, just finishing now.
Lutnick was referring to an EV plant Panasonic announced it had broken ground on in November 2022. Panasonic reportedly stands to gain billions in incentives for the plant under the Biden-era Inflation Reduction Act, which Trump has threatened to “rescind all unspent funds” from..
