President DOnald Trump recently announced a new round of tariffs on Chinese goods, including some on Americans’ favorite devices like the Apple Watch and the iPhone.
Earlier this month, the federal government implemented a 10% tariff on Apple Watches, AirPods, and other popular devices made in China, with a 15% tariff on iPhones, iPads, MacBook, and more set to start in December.
At the Apple Special Event on Sept. 10, CEO Tim Cook announced that the iPhone and Apple Watch would retail starting at $699 and $399. Last year’s models retailed for about the same price, which shows that Apple has decided, at least for this year, to absorb the costs of tariffs and not pass them onto American consumers.
Over 100,000,000 Americans own iPhones, and if Apple (AAPL) decides not to keep subsiding the cost of tariffs, everyone who buys a new iPhone will pay more than $100 extra every time they upgrade.
Cook has made a compelling argument to President Trump that new tariffs hurt Apple’s ability to compete with rival Samsung, as they are not hit with the tariffs because their products are made in South Korea. Apple, an American company, now seems to be at a disadvantage to foreign companies like Samsung, which can sell their foreign-made products to Americans without the cost of tariffs added on.
Does this mean Apple believes that the tariffs will be temporary? Or does this signal a willingness from Apple to use their billions of dollars in cash reserves to absorb the cost to their customers of the new tariffs for the long haul?
President Trump’s willingness to defend American industry is needed, but we need to be careful not to end up trapping American companies like Apple in the process. We can only speculate, but Apple’s response to the escalation of trade negotiations between the United States and China could signal how the eventual negotiations will end up affecting American companies and consumers.
President Trump is scheduled to meet with Chinese leader Xi Jinping in December to negotiate on trade and tariffs to improve how American companies compete with China’s industrial powerhouse. Nobody knows exactly how that meeting will go, but Apple’s willingness to absorb tariff costs this year signals that they either believe the tariffs will be temporary, or that they will be low enough to where Apple can absorb the costs of the tariffs.
This time around, even with tariffs on the horizon, the U.S. consumer has been able to avoid any price hikes on their favorite Apple products.
Only time will tell if the iPhone 12 will be more expensive due to tariffs, but President Trump and Xi Jinping’s December meeting will hopefully pave the way for better trade relations between our two nations. American companies and American consumers must always be put first in our negotiations, and President Trump must continue fighting for the American people in a way that avoids penalizing millions of Americans with extra tariffs unless they are completely necessary.
Meghan McNulty is an attorney, political commentator, and biomedical engineer based out of Southern California. She is a frequent commentator on national television and radio programs across the country.
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