Trump increases tariff exemptions on smartphones, computers and other electronic products
After more than a week of tariffs on products imported from China, the Trump administration issued a rule late Friday that retains smartphones, computers, semiconductors and other electronics from certain fees, a significant benefit targeting technology companies such as Apple and Dell, as well as iPhones and iPhones and other consumer electronics.
A message released by the U.S. Customs and Border Protection later Friday included a long list of products that would not face the reciprocal tariffs President Trump imposed on Chinese goods in recent days as part of a worsening trade war. These exclusions will also apply to modems, routers, flash drives and other technology products that are mostly not manufactured in the United States.
Immunity is not a complete probation. Other tariffs still apply to electronics and smartphones. The Trump administration imposed 20% tariffs on Chinese goods earlier this year because the administration is talking about the country’s role in the fentanyl trade. And, the government may still increase tariffs on semiconductors, an important part of smartphones and other electronic products.
These moves are the first major exemption for Chinese goods, which, if they persist, will have a wide impact on the U.S. economy. Technology giants like Apple and NVIDIA will largely avoid punitive taxes that may cut profits. Consumers, some of whom have been rushing to buy iPhones in the past week, will avoid a sharp rise in smartphones, computers and other gadgets. The exemption could weaken additional inflation and cause many economists to worry about the turmoil that could lead to recession calming.
The tariff relief is also the latest trigger for Mr. Trump to rewrite global trade to boost U.S. manufacturing. In Asia (especially in China), factories that burn iPhones, laptops and other electronics are deeply entrenched and unlikely to lack the power to be as exciting as the huge taxes proposed by the Trump administration.
“It’s hard to know if the government realizes that reprocessing the U.S. economy is an effort,” said Matthew Slaughter, dean of the Tucker School of Business in Dartmouth.
Electronic exemptions apply to all countries, not just China.
Nevertheless, any relief to the electronics industry could be short-lived as the Trump administration is preparing for another national security-related trade investigation by semiconductors. People familiar with the matter say this also applies to some downstream products such as electronics, as many semiconductors enter the United States inside other devices. These investigations have previously resulted in additional tariffs.
White House spokeswoman Karoline Leavitt said in a statement Saturday that Trump remains committed to seeing more of these products and components produced at home. “President Trump made it clear that the United States cannot rely on China to make key technologies,” she said, and in his direction, tech companies are “busy to manufacture onshore U.S. as soon as possible.”
A senior administration official spoke in the background because they had no right to speak publicly, saying Friday’s exemption was designed to maintain U.S. semiconductor supply, a basic technology used in smartphones, cars, toasters and dozens of other products. Many cutting-edge semiconductors are manufactured overseas, such as in Taiwan.
Paul Ashworth, chief capital economics economist at North America, said the move “represents a partial downgrade of President Trump’s trade war with China.”
He said nearly a quarter of 20 product types imported from the U.S. on Friday were imported from China. Other countries in Asia will be bigger winners, he said. He said if tariffs in these countries are activated again, the exemption would cover 64% of U.S. imports from Taiwan, 44% from Malaysia, and nearly a third from Vietnam and Thailand.
These changes interrupted a wild week, with Mr. Trump blinking back to the many tariffs he introduced on April 2 as “Liberation Day.” His so-called reciprocity tariffs have already proposed taxes, which can reach up to 40% on products imported by certain countries. Mr. Trump reversed the course after the stock and bond markets plunged and said he would suspend it for 90 days.
China is an exception to Trump’s relief as Beijing chooses to retaliate against our tariffs with its own taxes. Instead of suspending tariffs on Chinese imports, Mr. Trump increased it to 145% and was reluctant to exempt any company from fees. In return, China said Friday it raised its tariffs on U.S. goods to 125%.
This has put many tech companies in the free fall. In four-day trading, Apple’s valuation was about 80% in China’s iPhones, down $773 billion.
Currently, Mr. Trump’s moderation is a major relief to the technology industry, which has spent months integrating with the president. Meta, Amazon and several tech leaders donated millions to President Trump’s inauguration, standing behind him when he was sworn in January and promised to invest billions in the U.S. to support him.
Apple CEO Tim Cook has been at the forefront of Mr. Trump’s courtship. He donated $1 million to Mr. Trump’s inauguration and later visited the White House, promising Apple to spend $500 billion in the United States over the next four years.
The strategy repeated Mr. Cook’s tactics during Mr. Trump’s first term. To make a request to demand that Apple start producing its products in the United States rather than China, Mr. Cook established a personal relationship with the president, which helped Apple win tariff exemptions on iPhones, smartwatches and laptops.
It is not clear whether Mr. Cook can get a similar break this time, and Mr. Trump’s tariffs are even more serious. As the Trump administration’s tax on Chinese goods increases, Wall Street analysts say Apple may have to raise the price of its iPhone from $1,000 to more than $1,600.
The threat of higher iPhone prices has made some Americans eager to buy new phones at Apple’s store. Others compete to buy computers and tablets made in China.
Apple did not immediately respond to a request for comment.
Apple’s iPhone quickly became a symbol of tit-tat related to Chinese tariffs. Commerce Secretary Howard Lutnick appeared on CBS’s Face the Nation on Sunday and said tariffs would result in “a large army of millions of people screwing small in the United States with few screws to make iPhones.” Ms Levitt said later this week that Mr. Trump believes the United States has resources to make iPhones for Apple.
“Apple has invested $500 billion in the U.S.,” she said. “So if Apple doesn’t think the U.S. can do that, they probably won’t make such a big change.”
Apple has been moving some iPhone manufacturing to the United States for more than a decade. In 2011, President Obama asked Apple’s co-founder Steve Jobs to make what the best-selling product needed in the United States rather than China. In 2016, Mr. Trump also put pressure on Apple to change its position.
Mr. Cook’s commitment to China remains unwavering and said the United States is not skilled enough in manufacturing workers to compete with China.
“In the United States, you can have a meeting of tool engineers, and I’m not sure if we can fill the room. In China, you can fill multiple football fields.”
Additional tariffs may be imposed on semiconductors and other electronic devices in the coming weeks or months. The government has stated that it is considering laws and regulations under Article 232 and other tariffs on imported medicines.
The president has used the regulation to impose a 25% tariff on imported steel, aluminum and cars and is weighing similar steps for measures to import wood and copper. All these departments have exempted exemptions in the so-called reciprocity tariffs announced by the President on April 2.
The president told reporters the next day that other tariffs on other chips would “begin soon”, adding that the government is also working on tariffs on pharmaceuticals. “We will announce sometime in the near future,” he said. “Commenting is now.”
Other tariffs applied for by the Trump administration through the Article 232 investigation have been set at 25%, far below the current 145% tariff from many Chinese products.
Maggie Haberman Contribution report.
