Paul Santos thought Trump’s tariffs would hit the iPhone first. He was wrong.
From Apple Spared, Tesla Punished:
A couple of weeks ago, I wrote an article on Apple (AAPL) showing that if rumors were true, then Trump’s intention of slapping additional tariffs on Chinese products could potentially hit the iPhone. The reason for this was that the iPhone was arguably the largest culprit of the trade deficit within the very segment Trump was said to be targeting.
Two weeks went by and the rumors were half confirmed. Trump’s tariffs did come to fruition and sought to slap an additional 25% tariff on more than 1,300 Chinese goods, accounting for $50 billion in imports. However, Apple was spared. Apple was spared because this massive list ended up not focusing on the previously rumored segments.
Indeed, the US list ended up following some weird logic. The intent of the list followed, roughly, the following logic:
- To spare the American consumer.
- To hit Chinese products where alternate (foreign!) sources existed.
My take: Tim Cook’s shuttle diplomacy may be paying off. Meanwhile, props to Santos for owning his error.
See also:
I can’t see China putting Apple on their tariff list for one very important reason: Apple employs A LOT of Chinese workers. From factory, to local sales and services to app development. It would be self-destructive for China to put their own people out of work.
Secondly, if Apple found itself being held hostage by the Chinese gov’t over political machinations it has no control over – seriously hurting their ability to make iPhones, much less sell them – that would plant a potent seed for Cook and Company to build the iPhones somewhere else. Maybe not tomorrow, but someday.
China may offer advantageous working conditions now, but why would the Chinese gov’t give Cook a reason to look elsewhere? Makes no sense.