Although smartphones have generally been left out of the levies being imposed in the recent U.S.-China trade war, the Wall Street Journal reports that this may soon change. According to the report, U.S. President Donald Trump’s is now threatening to put down levies on “just about everything China ships to the U.S.” — which according to trade experts, would include the iPhone. Smartphones weren’t part of the $34 billion of levies on Chinese goods imposed on July 6, and were similarly excluded from the second $16 billion round expected in August, and were also left out of a third round of $200 billion that the Trump administration listed earlier this month. However, President Trump’s latest round of levies would encompass a total of $500 billion in imports.
According to data from the International Trade Centre, the U.S.imported $45 billion in mobile phones from China last year. On the flip side, China imports only about $130 billion in goods from the U.S. annually, but instead of imposing tariffs on U.S. goods, China could retaliate with higher duties and other punitive actions against U.S. companies, which would likely include Apple due to its higher share of China’s smartphone market. While China already has a value-added tax that affects iPhones, Apple has about 40 retail stores in China and an extremely lucrative App Store that could become retaliatory targets of the Chinese government, something that Apple already struggled with two years ago when it was ordered to shut down iTunes Movie and iBooks sales only six months after they began. China’s Ministry of Commerce and the State Council Information Office didn’t immediately respond to requests for comment.
Apple also declined to comment on this latest news, although CEO Tim Cook has continued to remain calm and promote open trade between China and the U.S., telling Chinese officially that “Countries that embrace openness, that embrace trade, that embrace diversity are the countries that do exceptionally,” and also telling President Trump during an April visit to the White House that tariffs aren’t the right approach to take to trade issues. According to the New York Times, President Trump told Cook in a meeting in May that the U.S. government would not levy tariffs on iPhones assembled in China.
To put the numbers in context, Apple already pays $368 in import costs for each iPhone X that is assembled in China; market researchers estimate that an additional tariff of 10 percent would add about $37 to that cost.