Apple can avoid tariffs by shifting production to US

Marco Green
September 13, 2018

Ford last month cancelled plans to import its Focus Active crossover vehicle into the U.S. from China because Trump's tariffs have undermined the business case for a vehicle with expected annual domestic sales of fewer than 50,000 units. Kristin Dziczek of the Center for Automotive Research said that Ford can make Focuses "in many other plants around the world, so if they chose to continue to sell a Focus variant in the USA market, there are several options other than building it in the United States".

European stock markets rose and Wall Street was expected to open higher on Monday, despite a drop in Asia, where investors fretted over the possibility of new and bigger USA tariffs on Chinese goods. It makes many of its products for the USA market in China, and it also sells gadgets including the iPhone in China, making them a potential target for Chinese retaliation against the Trump tariffs.

In its letter this week to the Office of the U.S. Trade Representative, Apple said that "because all tariffs ultimately show up as a tax on United States consumers, they will increase the cost of Apple products that our customers have come to rely on in their daily lives".

Aple CEO Tim Cook personally has encouraged Trump to avoid a major trade confrontation with China, telling the president during one-on-one meetings dating back to late 2016 that it would negatively affect American companies including Apple, a person familiar with those meetings told the WSJ. Today, a few different analysts are out with their take on what impact the tariffs will have on Apple, with the analysis ranging from a small impact to a slighter bigger one to, yes, Apple may have to raise some prices as a result.

- "This is just the beginning", Trump tweeted. The president offered the same remedy on Sunday for Ford, which no longer plans to export the Focus Active from China to America because of threatened auto tariffs. This automobile can now be BUILT IN THE U.S.A. and Ford pays no tariffs!"However Ford on Sunday refuted Mr. Trump's claim, saying "it must not successful to construct the Focus Active within the U.S." given forecast yearly sales below 50,000.For now, which technique Ford simply could perhaps fair not promote the auto within the united states".

"We believe the USA equity market reflects an expectation of additional tariffs", Goldman Sachs analysts said in a report dated September 8.

The statement follows a filing by Apple with the US Trade Representative warning that further US sanctions against China could lead to higher prices for its products in the US, the Wall Street Journal reports. The company had plans to begin making the vehicle in China in the latter half of 2019 and exporting them to the United States market. The US imported $505 billion in goods from China past year.

The Chinese response will depend on how far the USA goes with its next round of tariffs, Pang noted. The United States on July 6 began imposing a 25 percent tax on $34 billion in Chinese imports, including motor vehicles. "We hope, instead, that you will reconsider these measures and work to find other, more effective solutions that leave the USA economy and USA consumer stronger and healthier than ever before". The former is set to introduce tariffs on an extra $267 billion (approx Rs 19.3 billion) worth of Chinese goods in the coming days.

Other reports by Click Lancashire

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