On Monday, Trump told the Wall Street Journal in an interview that tariffs could be placed on Apple AAPL, -0.22% iPhones and Macbooks made in China, and that he expects to move ahead with plans to boost tariffs to 25% on $200 billion in Chinese-made goods, up from the current 10% levy, if no deal is reached. Trump also said he plans to add tariffs to another $267 billion of Chinese-made goods that are currently not subject to duties, at a rate of 10% or 25%. Trump said the only deal possible is that “China has to open up their country to competition from the United States.”
Apple’s shares fell nearly 2% in after-hours trading and one analyst said that its shares could get hit Tuesday.
“The Street will not be taking this news lightly,” said Dan Ives, an analyst at Wedbush Securities, in a note to clients late Monday, adding that this tariff threat is piling onto a “litany of bad news.” Apple said earlier this month it would no longer provide unit sales numbers on its individual products, followed by reports of lower-than-expected demand for some iPhone models. “And now this tariff threat on iPhones out of left field from Trump ... will surely add to this white-knuckle period for Apple,” Ives added.
In June, the Trump administration told Apple that the iPhone would be spared from its tariffs on Chinese goods. The iPhone, while designed by Apple engineers in Cupertino, Calif., is manufactured by Foxconn 2354, -0.65% in China. But if the iPhone and the Macbook are taken off the list of exempt items, the move could backfire and end up hurting Apple’s revenue if it has to raise its already high prices.
Read more about how Trump’s tariffs are hurting tech.
While Trump may just be trying to posture ahead of the talks, set to take place at a Group of 20 summit in Buenos Aires starting Friday, his other comments were also nerve-rattling. Some tech companies have slightly raised prices on goods made or assembled in China, if their products were on the long list of goods subject to tariffs. But so far the impact has been fairly minimal, although it has also created a lot of uncertainty in the global supply chain, company executives have said.
Raising the tariffs to 25% will have a far wider negative impact, hurting profit margins or causing companies to raise prices further. If Trump follows through with his tariff threats, this trade war with China could end up hurting not just Apple, but the wider global economy.