Apple asks U.S. for exemption from tariffs on Apple Watch, AirPods and more

Apple asks U.S. for exemption from tariffs on Apple Watch, AirPods and more
Prior to September 1st, Apple was barely exposed to the Trump administration's import tax on products imported into the U.S. from China. Certain cases for the iPhone and iPad were subject to the tax because, like most Apple products, they were designed in the U.S. but assembled in China. The U.S. has traditionally run a large trade deficit with China because U.S. consumers have more disposable income than their Chinese counterparts, and can afford to buy a larger amount of goods from China than their consumers buy from the states. But U.S. President Donald Trump equates such a deficit with "losing" even though most economists disagree.

In an effort to bring down the deficit, Trump initiated a trade war with China and announced that the U.S. would charge tariffs on goods imported from China. The president tried to make it appear as though the tariffs have forced China to pay millions of dollars to the U.S Treasury as he once tweeted. But that is simply not true. Tariffs are an import tax that U.S. companies pay. Firms, like Apple, can pay all, some or none of the taxes and pass the balance on to consumers by raising prices. Apple decided to "eat" the cost of the tax on the aforementioned cases so that their retail prices would stay the same.

Two of Apple's red hot wearables are getting socked with a 15% import tax

On September 1st, another tier of Chinese imports became subject to the tariffs. This tier of imports includes the Apple Watch and the wireless Bluetooth AirPods. These two products are the leaders in their respective categories and their success led Apple to report earlier this week that Wearables revenue rose 54% year-over-year during the firm's fiscal fourth quarter.

Bloomberg reports today that Apple has filed with the the U.S. Trade Representative’s Office for waivers on 15% tariffs that are being charged on 11 Apple products including:

  • Apple Watch
  • AirPods/Beats wireless earbuds and charging cases
  • iPhone parts including battery and smart battery case
  • iMac, storage for Mac Pro, battery for MacBook
  • Beats Pill+ wireless speaker
Apple says in the filing that it cannot find a source outside of China than can supply it with the parts it needs for the coming year. The decision on whether to waive the tariff on a Chinese import is based on whether the product can be sourced from other countries, or if it is considered important to Chinese industrial production. Also taken into consideration is whether the tariffs will cause "severe economic harm" to the company (in this case Apple) or the U.S. Last year, Apple sought exemptions on 25% tariffs that were set to be charged on 15 components for the MacBook Pro. The company was denied relief on five of the components, but was able to avoid paying the import tax on ten of them. Last month, Apple announced that it would produce Mac Pro computers at a facility in Austin, Texas that it has owned since 2013.

The Trump administration was also planning on taxing smartphones imported from China on September 1st. But to keep prices from potentially rising during the Christmas holiday season, the 10% tariffs on some consumer products, including smartphones, will kick off on December 15th instead.

In the past, President Trump has warned Apple that the only way for the iPhone to avoid getting hit by tariffs was to move production of the device to the states. Apple responded by trying to explain to the president how tariffs really work. And while Apple has been thinking about moving some of its iPhone production out of China, it probably would be countries like India or Vietnam that would be beneficiaries of such a move. The company already produces a limited number of iPhones in India for the domestic market.



1. Alcyone

Posts: 527; Member since: May 10, 2018

Time for consumers to put more pennies in the light bank to cover the costs. Apple wouldn't be nice enough to cover all the difference. Then again, maybe some will get the exempt. This scenario was bound to happen, it's now, rather than later. Short sightedness got the best of Cupertino.

3. sgodsell

Posts: 7491; Member since: Mar 16, 2013

Apple was greedy enough to leave the US in the first place, but now that things are getting more expensive. Apple wants a break, or a hand out. What about giving your customers a break? No? Apple knew full well by removing all manufacturing from the US in the first place would kill off US jobs. Apple didn't care back then. So why should anyone care right now. Your products are overpriced to begin with, and Apples profits prove that. There is a fitting expression that is perfect for Apples scenario right now. "You made your bed Apple, now lie in it.". If not Apple has enough followers who always say things like take my money. So Apple take more of your customers money.

9. mackan84

Posts: 589; Member since: Feb 13, 2014

You guys sounds like idiots. Think about it yourself, if you can buy the same smartphone for less money at another store. Wouldn’t you buy it there? Or if you invested your money into a project and suddenly the government taxed that project with an extra 15%, wouldn’t you want those in charge of the project try to do something about that? Or if you was in charge of that project try to explain to your investors why they won’t see that 15% and just be fine with it.

10. Alcyone

Posts: 527; Member since: May 10, 2018

I agree. Haven't come across an Apple product lately worth keeping. The new iPhone was a let down. My 5s was the Apple product I owned.

2. Rocket

Posts: 681; Member since: Feb 24, 2014

Come on! they have enough money to take the hit.

5. sgodsell

Posts: 7491; Member since: Mar 16, 2013

Of course they have enough money. Apple had record profits last quarter, and that is with the decline of iPhone revenue to the tune of 3.4 billion dollars less.

4. JCASS889

Posts: 591; Member since: May 18, 2018

Apple does not care about anything but their profits, it's truly disgusting how a corporation can try to act so kind and caring yet truly be so greedy. Only reason I don't buy their amazing phones and other devices.

7. Whitedot

Posts: 847; Member since: Sep 26, 2017

How well put :"how a corporation can try to act so kind and caring yet truly be so greedy". Apple like any other OEM are money making machine first. Second they known to be very greedy. Kind and charitable never rythms with greed.

6. shawman

Posts: 74; Member since: Sep 18, 2012

Considering China controls the rare earth metals, I am not sure how its possible for Apple to move everything out of China. I guess they can assemble the phone out of India or Vietnam. But that is still hard. Obviously Apple dont want to impact the insane margins they have. Stock is at all time high and just overtaken Microsoft again to be Number 1 Market Cap.

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