We’ve said it before, and we will say it again just so it is perfectly clear what we’re talking about. The tariffs imposed by the Trump administration on certain imports into the states from China do not and never have resulted in China paying the U.S. one red cent. Despite tweets sent out a number of times by the president stating that the U.S. Treasury was receiving millions of dollars from China because of the tariffs, that is simply not true.
The iPhone has managed to escape the tariffs imposed by the Trump administration
The tariffs are an import tax that is paid by companies that import products from China with Apple being a prime example. The company, as duly noted on most of its devices, will design its products in Cupertino and have them assembled in China. As a result, Apple is asked to pay a tax on certain iPhone and iPad cases, the Apple Watch, AirPods and more. Companies then have the option of eating the cost of the tax themselves or passing it on to consumers in the form of higher retail prices. Thus far, Apple has been stuffing its face by paying the tax.
So far, the iPhone has been able to escape being taxed. First, the iPhone was supposed to be hit with a 15% tax last September 1st as part of a group made up of $300 billion worth of Chinese imports. Other smartphones were also included in this tier of products. But Trump soon eliminated some products, including cellphones, from the list of devices being taxed starting on September 1st. Instead, those devices would be taxed starting on December 15th. The president, explaining why he pushed back the start date, said that he didn’t want price hikes to ruin the upcoming holiday shopping season for Americans. However, Trump did impose the tariffs on two of Apple’s hottest devices, the Apple Watch and the wireless Bluetooth AirPods.
But the December 15th tariffs have never been collected because the U.S. and China were negotiating on Phase One of a new trade agreement and when the deal was signed in January, the iPhone was among the products that were saved from being taxed at the last minute. The deal also reduced the tariff on some devices like the Apple Watch to 7.5% from 15%. And earlier this month,
the company’s timepiece no longer was taxed after the U.S. Trade Representative (USTR) exempted the device from the import tax. In its application to the USTR, Apple noted that its smartwatch “is not strategically important or related to ‘Made in China 2025’ or other Chinese industrial programs.” The manufacturer also pointed out that it could not find a place other than China that can meet U.S. demand for the product over the next year.
The relationship between Apple CEO Tim Cook and U.S. President Donald Trump, as we’ve pointed out before, is a complex one. Trump has criticized Apple for not allowing the FBI to unlock iPhone units belonging to terrorists and he has demanded that Apple build more devices in the U.S.
The Verge was able to get its hands on emails between Apple and the U.S. government through Freedom of Information requests. What it learned was that last July 8th, Cook spoke with US Trade Representative Robert Lighthizer in an attempt to cushion Apple from another round of tariffs that was planned.
One email, written by an Apple employee, described a meeting that Cook had
with the man who famously called him “Tim Apple” over a year ago, and then denied that it happened. The email said, “Tim and POTUS had a discussion today about this as well which I can fill you in on. Tim was hoping to speak to the Ambassador sometime this weekend if at all possible to follow up.” A few days later, Cook had the aforementioned meeting with the Trade Representative, most likely to discuss a proposed 25% tariff on parts imported for the U.S. assembly of the MacBook Pro. Apple put on a full-court press with one employee telling his USTR counterpart, “whatever can be done on the front end would be hugely impactful.”
Tim Cook and Donald Trump do not seem like they would have much in common at all. So that leads us to believe that Apple’s CEO has figured out a way to play the president for the benefit of Apple. Either that or the president has become a huge fan of Apple’s CEO and has great admiration for him. Which seems more likely?