Published: Tue, September 11, 2018
Worldwide | By Lisa Hogan

Trump tells Apple to make products in US to avoid China tariffs

Trump tells Apple to make products in US to avoid China tariffs

Trump's suggestion of tariffs is just the latest attack in the trade war between the U.S. and China, and there is the possibility of a further $267 billion tariff package also being imposed on Chinese goods.

The US government already imposed 25 percent tariffs on $34 billion of Chinese imports in July and another $16 billion last month.

The tariffs that Trump has imposed, and threatened to impose, total $517 billion - more than the $505 billion in Chinese goods that entered the country past year. "That totally changes the equation".

The trade conflict between the world's two biggest economies shows little sign of abating, roughly two months after the US imposed its first round of tariffs on Chinese goods, and negotiations to defuse the tensions have stalled.

The tariffs are meant to punish China for what the Trump administration says are unfair trading practices, including the forced transfer of intellectual property from US companies trying to get a foothold in the Chinese market. Trump has set the stage for tariffs on another $200 billion in Chinese imports, which could happen any day.

"Our concern with these tariffs is that the US will be hardest hit, and that will result in lower USA growth and competitiveness and higher prices for USA consumers", Apple said in the letter. If that pace continued for the remainder of this year, Chinese imports would top $548bn - leaving Trump a bit short of complete coverage of Chinese goods.

"There is still an impact from front-loading of exports, but the main reason (for still-solid export growth) is strong growth in the USA economy", said Zhang Yi, an economist at Zhonghai Shengrong Capital Management. For example, the proposed tariffs cover Apple Watch, which has become the top-selling smart-watch in the us and globally.

In a letter written to the US Trade Representative on Friday, Apple some of its popular products will get hit by the 25 per cent increase in import tax. It could also devalue its currency, to make exports cheaper in the United States.

Intel Corp., the world's second-largest chip maker, weighed in supporting Apple's opposition to the tariffs and broadening the argument.

The President believes that the easiest way to mitigate this is to manufacture products in the US. The president has argued that aggressive tariffs will force China to modify unfair trade practices and negotiate trade arrangements that are more beneficial to American firms.

The administration says eliminating the trade deficit will put the economy on a sustainable path of faster growth, an argument that has been dismissed by economists as flawed given constraints such as low productivity and slow population growth.

Four major US tech companies have written to the US Trade Representative (USTR) asking for protection from the proposed third round of Trump tariffs.

China's annual export growth in August moderated slightly to 9.8 percent, the data showed, the weakest rate since March but only slightly below recent trends.

US companies are joining forces to oppose a common threat-tariffs.

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