Increase in US Import Taxes Hits Apple Accessories Hard

This past Friday, the US raised import taxes to 25% on Chinese good valued over the billion mark. The raised taxes are only the latest in the ongoing trade war escalation that has been going on between the US and China.

When the tariffs were announced, political commentators speculated that they were a negotiating tactic to use as leverage in ongoing trade talks between Trump and Chinese President Xi Jinping.

However, recent Trump tweets celebrating the new taxes seem to indicate that the 25% tax is here to stay, at least for the foreseeable future.

Which could be a he problem for companies involved in international trade.

For example, China has already retaliated by adding an additional $60 billion tariff on US imports to China, a handicap for US businesses selling chemicals and frozen produce to China.

While hardware companies are extremely reliant on trans-Pacific trade, tariffs have mostly avoided computers and smartphones, instead narrowing in on components.

Last September, a worried Apple sent a letter to the US Trade Representative outlining how the proposed tariffs would impact the company and asking for changes before final codes were published.

Lucky for Apple, some codes, including those for AirPods and Apple Watches, were exempted from the tariff.

However, the codes for Apple’s accessories, such as chargers, cords, adapters, cables and iPhone cases, stayed on the list at a 10% taxed rate.

On Friday, the tariff jumped the percent to 25%.

As of right now, that additional 15% tax has been absorbed by Apple and its suppliers.

It’s possible that Apple’s margins are so wide that they can well afford to just bite the extra cost. Or, perhaps shifting suppliers has helped them avoid the tariff.

Even so, current US-China relations have everyone watching trade, especially Apple.

CloudWedge