The trade war between the U.S. and China will hit Apple Inc. this weekend, dragging the largest US technology company into a fracas that threatens to raise prices on popular consumer gadgets and undermine a giant but delicate global supply chain.
President Donald Trump’s 15% China tariffs were entered into the Federal Register on Friday, making the move official. At 12.01 a.m. local time on Sunday in Washington, the levies will kick in for hundreds of products entering the US or being withdrawn from warehouses for consumption in the U.S., according to the order.
One veteran analyst was holding out hope for a last-minute reprieve.
“The US adding tariffs to any Apple product without some type of corresponding offset to mitigate the negative effects crosses the Rubicon on many dimensions,” Gene Munster of Loup Ventures, wrote in a note on Friday. “We believe the U.S. does not want to be the first to add tariffs to Apple, given Apple is arguably the leading US company and the face of American business in China. The optics of a US protectionist first approach penalizing a US global leading company while China doesn’t penalize Apple would seem to surrender the moral high ground.”
Any reprieve for Apple looked unlikely on Friday as Trump showed little sign of backing down and blamed US companies for their inability to deal with a trade policy he said was aimed at reining in “unfair players.” Apple didn’t respond to requests for comment.
Here’s a list of Apple products that will be hit by 15% tariffs starting this weekend:
- Apple Watch and Watch bands
- Some Beats headphones
- IMac computers
- Repair parts for iPhones may also be hit
- Nand flash, a key storage component for iPhones, could also be affected
The iPhone, which contributes more than half of Apple’s revenue, won’t face this 15% tariff until Dec. 15. But the other hardware products made up at least 10% of sales in the company’s 2018 fiscal year, and many of these will have to absorb the 15% import levy that kicks in on Sunday.
Apple has been lobbying Trump for more than a year to avoid tariffs. During a recent dinner with the president at his golf club in Bedminster, New Jersey, Chief Executive Officer Tim Cook voiced concerns that Apple’s main rival Samsung Electronics Co. will get an edge because its products won’t be subject to the levies.
Just days after that dinner, Trump announced that tariffs on $300 billion of goods from China would be 15%, up from 10%. These take effect in two tranches, which the first batch happening Sept. 1.
Apple spent decades building one of the largest supply chains in the world. The company designs and sells most of its products in the US, but imports them from China after assembly. That makes it one of the most exposed companies to tariffs.
Disclaimer: This article first appeared on Bloomberg.com, and is published by special syndication arrangement."