If you live in the U.S. and end up having to pay much more for your next Apple iPhone, you might put the blame squarely on President Donald J. Trump. The president went against the advice of his rapidly changing staff (can’t tell the players without a scorecard) and announced tariffs against imports from China. A 25% tariff will be added to as much as $50 billion worth of goods from the country. The majority of products affected are said to be from the high-tech sector.
While many consider the Apple iPhone to be as American as Apple Pie, the truth is that the handset is designed in the U.S. and is assembled in China. From there, it is shipped to other countries including the U.S. That would make the device vulnerable to Trump’s tariffs. The president says that the tariffs placed against Chinese imports are “the first of many,” and China’s U.S. ambassador said his government is “not afraid” of a trade war.
If a 25% tariff is slapped on the iPhone, it will be up to Apple and individual retailers and carriers to decide whether or not U.S. consumers will end up paying for the entire amount. A 25% tariff applied to the 64GB Apple iPhone 8 could take its price to $873.75 from the current $699. The 64GB Apple iPhone 8 Plus would be priced at $998.75, compared to the current $799. The 64GB Apple iPhone X might run you $1,248.75 versus the pre-tariff price of $999. Apple’s shares dropped by more than 2% on Thursday (including after-hours trading) to close at $167.70.
China does not have any way to make it harder for companies like Apple to have their devices assembled in the country, so even if China retaliates against the U.S., it would appear that iPhone buyers in the states will be among the most affected, even though the motive in announcing the tariff is to get back at China’s alleged theft of U.S. intellectual property. China currently runs a $375 billion trade surplus with the U.S. and the Trump administration wants it to be reduced by at least $100 billion.
Before the tariffs are put into place, the U.S. will release a list of 1,300 products that are affected. U.S. companies who buy some of these products will be able to appeal.