Apple Escapes Supply Chain Crisis As Trump Excludes Popular Electronics From Tariffs

Apple Inc. AAPL has managed to dodge a potential disaster as its key consumer electronics have been exempted from the 125% tariffs on goods manufactured in China by President Donald Trump.

What Happened: The tariff exemption announced by President Trump on Friday night encompasses iPhones, iPads, Macs, Apple Watches, and AirTags. Furthermore, the 10% tariff on goods imported from other countries has been waived off for these products.

Despite the possibility of a new, lower sectoral tariff being imposed on goods containing semiconductors, and a 20% tariff on China still in place, this development signifies a major triumph for Apple and the consumer electronics industry that is heavily dependent on China for production, reports Bloomberg.

Amit Daryanani, an analyst at Evercore ISI, expressed his relief for Apple in a note on Saturday, stating, “The tariffs would have driven material cost inflation.” He predicts a surge in Apple’s shares on Monday following an 11% plunge this month.

Prior to the recent exemption, Apple had devised a plan to shift its supply chain to manufacture more US-bound iPhones in India, which would have been subject to much lower levies.

Also Read: Trump Grants Tariff Reprieve to Tech – Including From China – In Surprise Move

This strategy was viewed as a short-term solution to evade the high China tariff and avert significant price increases.

Nevertheless, uncertainty prevails as White House policies are prone to change, and Apple may need to implement more drastic alterations. The Chinese Ministry of Commerce has described the move as “a small step by the US toward correcting its wrongful action of unilateral ‘reciprocal tariffs’,” and has called on the US to completely rescind the action.

Howard Lutnick, the US Commerce Secretary, indicated on ABC outlet that the late Friday reprieve was temporary, and reiterated Trump's plan to apply a different, specific levy to the sector.

Why It Matters: The tariff exemption is a significant development for Apple, which heavily relies on China for manufacturing its products. The move could potentially save the company from significant cost inflation, as noted by Evercore ISI analyst Amit Daryanani.

However, the uncertainty surrounding White House policies and the temporary nature of the reprieve means that Apple may still need to consider alternative strategies, such as shifting more of its manufacturing to countries like India.

The ongoing trade tensions between the US and China also add an element of unpredictability to the situation.

Read Next

Apple Revamps Leadership, Preps New Vision Pro Headsets Amid Commercial Hurdles

Image: Shutterstock