Technology

Apple warns Trump tariffs would hurt its competitiveness

iPhone maker says duties would add hundreds of dollars to its high-end products

Chinese workers assembling a cheaper local alternative to the Apple Watch in a factory producing thousands every day in Shenzhen, in southern China’s Guangdong province. Photograph: Getty Images

Tim Bradshaw
Thu Jun 20 2019 - 18:12

Apple has warned that proposed tariffs on imports of iPhones and its other flagship products from China to the United States would "tilt the playing field" in favour of its overseas rivals and dent its multibillion-dollar contribution to the American economy.

In a letter to the US Trade Representative that was made public on Thursday, Apple urged the Trump administration to abandon its plans for tariffs of up to 25 per cent on products including iPhones, iPads, Macs, Apple Watch and AirPods, as well as parts used in device repairs. The duty could add hundreds of dollars to the cost of Apple's high-end products.

The warning follows a report in the Nikkei Asian Review this week that Apple has asked its suppliers to explore moving as much as 30 per cent of its production capacity out of China, as a result of the two countries' escalating trade dispute.

“We urge the US government not to impose tariffs on these products,” Apple wrote in its letter to the USTR, as part of its consultation on the proposals.

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Global competitors

The iPhone maker alluded to Chinese rival Huawei as it warned that competitors who do not have a "significant presence in the US market" would "not be impacted" by the tariffs. "A US tariff would therefore tilt the playing field in favour of our global competitors," it said.

Apple said that it is “on track” to make a $350 billion (€310 billion) “direct contribution” to the American economy over five years, a target first disclosed last year following the passage of US tax reforms.

The Silicon Valley-based company, which says it is already the largest US corporate taxpayer, is opening new facilities across the country, including a new campus in Austin, Texas, and plans to add thousands of new jobs.

But those plans could be threatened if President Donald Trump proceeds with the tariffs. The escalating trade war has already hit iPhone sales in China, Apple warned earlier this year.

“US tariffs on Apple’s products would result in a reduction of Apple’s US economic contribution,” it wrote.

Concerns

Apple was just one of dozens of American businesses, large and small, that have written to the USTR to voice concerns about the tariffs.

The Consumer Technology Association, a trade group, warned that $167 billion in annual imports from China among its members would be affected. The tariffs would undermine US efforts to increase access to digital technology and harm American companies’ ability to lead in emerging fields such as augmented and virtual reality.

“It is not easy for CTA member companies to simply ‘move’ supply chains,” the organisation warned.

– Copyright The Financial Times Limited 2019

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