Published: Wed, November 28, 2018
Money | By Ethel Goodwin

Trump warns Apple iPhones could face 10% tariff, shares sink

Trump warns Apple iPhones could face 10% tariff, shares sink

A former top trade official on Capitol Hill told Axios in light of Trump's statements: "My main takeaway is that maybe Wall Street needs to stop being so optimistic that Trump is going to negotiate away this China thing in the relatively near future". His aides, however, have reportedly suggested that those items be exempt from the tariffs in fear of consumer reaction.

When the WSJ asked if that includes handsets like the iPhone as well as notebook computers, he said "Depends on what the rate is, I can make it 10%, and people could stand that very easily".

"Donald Trump's renewed tariff threats against China have magnetized investors to the U.S. Dollar", Lukman Otunuga, a research analyst at broker FXTM, said in a note.

And if an upcoming round of trade talks with China doesn't resolve trade tensions, Trump said, he might put tariffs on the Chinese imports that have avoided them so far.

"We are seeing a greater degree of stability in sterling, but it went below recent ranges on Trump's comments", said Neil Mellor, currency strategist at Bank of New York Mellon in London.

World stock markets fought to keep a rebound alive on Tuesday after U.S. President Donald Trump seemed to quash hopes of a trade truce with China, clouding what had been a bright start to the week.

The smartphone maker did not immediately respond to a request for comment. The iPhone accounts for about 60% of Apple's revenues. RBC also lowered its price target on the stock to $235 from $240. Of course, Apple is far from the only US tech company to be potentially affected, though it's certainly among the most high-profile. Still, the company warned in September, that other items, like the Mac mini, Apple Pencil stylus, and some cables and cases, could be harmed.

Additionally, existing United States duties on Chinese imports are set to rise from 10 percent to 25 percent in January, affecting $200bn worth of imported goods.

Analysts at National Australia Bank noted the 30 per cent drop in oil since early October would drag on USA inflation in coming months, perhaps offering further reason for the Federal Reserve to go slower on tightening.

But Kudlow warned that if China holds out against USA demands, Washington could ramp up the trade war. "They haven't been. They have to treat us fairly", Trump told reporters at the White House. The move is part of measures to reduce trade deficit with China and alleged theft of American intellectual property and forced transfer of technology, according to the office of the US Trade Representative.

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