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article imageApple criticizes Trump's tariffs as costly to production

By Ken Hanly     Jun 20, 2019 in Business
In a letter to US trade representative Robert Lighthizer Apple claims that the Trump administration tariffs could both lower the company's economic output and put it at a disadvantage especially in relation to its Chinese competitors.
Trump tariffs could impact almost all Apple products
Apple claims the tariffs will have an impact on almost all Apple products including the iPhone, MacBook, AirPods and the Apple Watch. The tariffs will also hurt US employees and lessen the company's ability to contribute to the US economy.
Negative effects have increased with tariff increases
The earlier rounds of tariffs did not hit Apple's highest volume item such as the iPhone and Apple Watch just items such as adapters, chargers, cables and cords. However, now the situation is more serious and Apple is speaking out as in May Trump announced a massive expansion of tariffs that hurt items such as computers, smartphones and televisions. The Office of the US Trade Representative is seeking feedback on these tariffs and that is why Apple wrote the letter.
A recent Financial Times article also notes that the Trump tariffs would tilt the playing field in favor of Apple's competitors especially those in China, and would also put a dent in Apple's contribution to the US economy.
Other companies also responded to the request for feedback
Other companies that are involved with computer manufacturing such as Dell, HP, Intel and Microsoft also wrote to Lighthizer expressing their opposition to the tariff increases. The letter claimed that the tariffs would hurt US technology leaders and hinder their ability to innovate and compete in the global market place.
Tariffs face US companies with limited options
Companies could move production out of China. Apple is said to be exploring such a move, perhaps to India or Vietnam. This could be expensive and disruptive for the technology giant. The companies could raise their prices, but this could hurt sales and be a competitive disadvantage. Companies could also simply absorb the extra costs but then this would have a very negative impact on profits. The best scenario for both sides would be a trade deal between the US and China that removed the tariffs.
A recent article reports on Apple's consideration of moving production from China: "Apple has asked its major suppliers to evaluate the cost implications of shifting 15% to 30% of their production capacity from China to Southeast Asia as it prepares for a fundamental restructuring of its supply chain, the Nikkei Asian Review has learned."
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