Apple temporarily escapes new tariffs as U.S.-China trade war escalates

“U.S. President Donald Trump made good on a trade war deadline on Friday, increasing tariffs on some Chinese imports,” Roger Fingas reports for AppleInsider.

“Goods already under a 10 percent tariff are now subject to 25 percent, according to BBC News,” Fingas reports. “Trump indicated that work is in motion, however, to slap a 25 percent tariff on another $325 billion in Chinese goods, which could harm Apple profits given that most its products are assembled in China by firms like Foxconn and Pegatron.”

“Talks between the two countries took a turn for the worse recently after the U.S. accused China of backtracking on key points,” Fingas reports. “Apple may be more likely to absorb any hit, since it can fall back on its $225.4 billion in cash reserves if all else fails.”

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MacDailyNews Take: Apple has temporarily escaped the higher tariffs because:

A “grace period” was included on these tariff increases, so that goods currently in transit to the U.S. from China aren’t subject to the new 25% tariffs, just the old 10% tariff. That grace period was not included in previous rounds of tariffs and is likely an olive branch of sorts to the Chinese side. Given shipping times, goods sent from China today will take two weeks or so to reach the U.S., so if a trade deal is stuck in that time frame, the pain of the 25% tariffs will never be felt. — Tom Essaye, founder of Sevens Report, wrote in a note to clients on Friday

SEE ALSO:
Dow futures fall after President Trump tweets ‘absolutely no need to rush’ on China trade deal – May 10, 2019
China overplayed its hand with U.S. President Trump on trade, and it could cost them dearly – May 9, 2019
Apple CEO Tim Cook optimistic about U.S.-China trade talks – February 12, 2019
President Trump says U.S. doing well in trade negotiations with China – January 23, 2019
China’s 2018 growth slows to 28-year low, more stimulus seen – January 22, 2019
Apple CEO Tim Cook: I’m very optimistic about U.S.-China trade talks – January 8, 2019
Advisor to President Trump: Apple’s sales should pick up when U.S.-China strike trade deal – January 3, 2019

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