Apple Gets Reprieve From New China Tariffs

Some products from Apple Inc. (NASDAQ: AAPL) have been spared from the next round of tariffs imposed on Chinese goods by the Trump administration. The government has released its final list of Chinese products that will be hit with a new 10 percent tariff. The new round of tariffs will take effect on Sept. 24.

According to the office of the U.S. Trade Representative, the administration has spared a category of high-tech products that includes the Apple Watch and AirPods headphones. Apple sold 4.7 million smart watches last year, according to research company International Data Corp. Similar smart watches and fitness trackers have also been exempted from the new tariffs. The value of these imports from China is estimated to be about $12 billion.

Other Apple products exempted include the HomePod speaker, BeatsWL headphones, and AirPort and Time Capsule internet routers. Altogether about 300 product categories were spared, including some non-tech consumer devices like bicycle helmets and baby car seats.

Earlier this month, Apple announced that a “wide range” of its products would be hit by the proposed tariffs. The company is more exposed than many multinational companies because it has centered its production chain in China. Apple also told regulators earlier that some of the gear in its data centers was likely to be hit by the tariffs.

The administration’s proposed tariffs, which will rise to 25 percent on Jan. 1, 2019, drew protest from technology companies earlier this year. In a letter to U.S. Trade Representative Robert Lighthizer, Apple asked for the administration to consider other measures to support the US economy and American consumers.

Apple wrote: “Tariffs increase the cost of our U.S. operations, divert our resources, and disadvantage Apple compared to foreign competitors. More broadly, tariffs will lead to higher U.S. consumer prices, lower overall U.S. economic growth, and other unintended economic consequences.”

For the time being, the tariffs are going forward. US President Donald Trump has warned that if China takes retaliatory action against US farmers or industries, tariffs on approximately $267 billion of additional imports may be imposed. At that point, nearly every Chinese import would be affected.

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