In an interesting move, the Trump administration has announced tariff exemptions for tech and electronic products which include smartphones and laptops. The latest exemption comes after the the US government announced a staggering 145% reciprocal tariff on goods imported from China to the US.
The latest development provides relief for US consumers as the majority of tech products from major brands including Apple are manufactured and imported from China. With the insane 145% tariff, consumers would have to fork out significantly more to buy a shiny new iPhone.
According to the updated guidance issued by US Customs and Border Protection, tech products and components such as smartphones, computers, semiconductors, solar cells, flat panel TV displays, flash drives, memory cards and SSD are exempted from the tariff.
To brace for inevitable tariff impacts, it was reported that Apple had chartered six cargo flights to ship 600 tonnes of iPhone (1.5 million units estimated) from India to the US before the tariffs took effect. While Apple has multiple manufacturing facilities worldwide, its supply chain is heavily dependent on China which is their main manufacturing hub for its products.
Tim Cook has said before that the reason why it relied on China for manufacturing was not due to cost. During an interview at Fortune Global Forum 7 years ago, he said China has stopped being the low labour cost country many years ago and companies have turned to China because of the skill and advanced tooling. He said the vocational expertise is very deep in China and he gave the educational system a lot of credit.
As much as Donald Trump wants tech companies such as Apple to bring most of its manufacturing job back to the US, the reality is that factories don’t get built overnight and it also requires a large workforce with specialised skills which is hard to replicate in the US.
Responding to US government’s latest tariff increases, China has raised its import tariff on US goods to 125% while dismissing Trump’s tariff strategy as “a joke”. On Friday evening, the US announced a 90-day pause on reciprocal tariffs on several countries that have not retaliated including Malaysia.
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