President Trump and Tim Cook met for dinner this past Friday at the president’s golf club in Bedminster, New Jersey. Apple manufactures many of its products in China and contend that it would be difficult to entirely move manufacturing to other countries. Cook reportedly argued that the new tariffs would make it hard for Apple to go toe-to-toe with companies like Samsung. Samsung primarily manufactures its products in South Korea and Vietnam. Although they manufacture some of their products in China, they are largely unaffected by the tariffs.
Apple would likely need to increase its prices to accommodate the tariffs, however many already argue that Apple products are too expensive. It is believed that these high prices, especially with respect to iPhones, partially contributed to disappointing revenue last year.
There is also a concern that tariffs would impact jobs. Apple is reportedly responsible for 1.9 million American jobs and it directly employs 90,000 people in the United States. If higher prices equal fewer sales, then Apple would likely need to cut several jobs.
President Trump told reporters that he believed Cook had made a “very compelling argument”. He added “ It's tough for Apple to pay tariffs if they're competing with a very good company that's not. I said, 'How good a competitor?' He said they're a very good competitor.”
The Trump administration recently increased tariffs on $300 billion USD worth of Chinese imported goods by 10%. These new tariffs were originally supposed to go into effect on September 1st and included consumer electronics. Some of the tariffs have been delayed by a little over three months due to concerns about affect the holiday shopping season. These delays affect products such as iPhones, iPads, and MacBooks. Other Apple products will be hit by the tariffs on September 1st including AirPods, HomePod and Apple Watch devices.
Having dinner tonight with Tim Cook of Apple. They will be spending vast sums of money in the U.S. Great!— Donald J. Trump (@realDonaldTrump) August 16, 2019
These tariffs could particularly impact Apple’s upcoming device sales. Rumor has it that Apple will announce the iPhone 11 in September. Will the tariffs on other items impact Apple’s most popular product? Will it be able to compete with the upcoming Samsung Galaxy Note 10 and Note10+? What happens in 2020?
President Trump has stated that there will not be an end to the trade war if China responds violently to the Hong Kong protestors. Although the trade war has experienced thaws, there is currently no end in sight. Apple may want to take a more careful look at their manufacturing practices.