Arthur J. Villasanta – Fourth Estate Contributor
Cupertino, CA, United States (4E) – The letter Apple, Inc. wrote to the Trump administration strongly opposing the proposed tariffs on $200 billion worth of Chinese exports won’t stop these tariffs from being implemented within the next few weeks.
The new taxes will mean Apple will have to raise prices on many of the devices it sells in the United States just in time for the very lucrative holiday season.
The unsigned letter to Trump, which was likely written by Apple CEO Tim Cook, said Trump’s latest tariffs on China will force Apple to increase retail prices of the Apple Watch and AirPods, two of Apple’s core product lines, among many others. Cook said the proposed tariffs “show up as a tax on the consumer.” He’s concerned the new tariffs “cover a wide range of Apple products” as well as other materials that Apple uses to make its products.”
More ominously, Cook said that because “all tariffs ultimately show up as a tax on U.S. consumers, they will increase the cost of Apple products that our customers have come to rely on in their daily lives.”
Among the Apple devices that will see higher prices are digital health and wireless connectivity products (including Apple Watch, Apple Pencil and Air Pods); Apple computing tools such as MacMini; Apple adapters, cables and chargers engineered for efficiency and safety; Apple-designed components and made-to-specification tooling for Apple’s U.S. manufacturing and product repair facilities; specialty testing equipment for Apple’s U.S. product development labs; and servers, hard drives and cables for Apple’s U.S. data centers that support our global services such as the App Store.
“Our view on tariffs is that they show up as a tax on the consumer and wind up resulting in lower economic growth and sometimes can bring about significant risk of unintended consequences,” said Cook.
“That said, the trade relationships and agreements that the U.S. has between the U.S. and other major economies are very complex and it’s clear that several are in need of modernizing, but we think that in the vast majority of situations that tariffs are not the approach to doing that and so we’re sort of encouraging dialogue and so forth.”
“I can’t predict the future, but I am optimistic that the countries will get through this and we are hoping that calm heads prevail,” he noted.
Economists argue that Trump’s tariffs will cause the cost of goods to increase for businesses and consumers in the United States. Apple also said that tariffs would harm Apple compared to its international competitors.
Apple’s total sales for fiscal 2017 amounted to $229 billion. Mobile phones account for the largest share of U.S. import from China. These devices haven’t been hit by Trump’s tariffs but will be under the new list drawn up by the administration.
Oddly, Apple’s letter to Trump didn’t mention the iPhone, which accounted for two-thirds of Apple’s fiscal 2017 revenues. It also made no mention of the iPad, which brought in $19.2 billion in sales or its Mac computers that generated $25.8 billion.
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