Apple Issues Letter Responding to President Trump’s Proposed Tarrifs

The Trump administration is poised to impose 25 percent penalties this week on $200bn worth of Chinese goods

Apple has warned that proposed U.S. tariffs on China could force it to raise the price of many of its products.

The news of the surplus came just hours after U.S. President Donald Trump threatened to impose another $267 billion worth of tariffs on Chinese imports, which would cover virtually all the goods China imports to the United States. "Start building new plants now", Trump recommended. "Exciting!" Trump said in the tweet.

At the same time, Apple is already using components sourced from USA manufacturers in some of its products.

Apple said the tariffs would raise the cost of its US operations and put it at a disadvantage to foreign rivals.

But President Trump proposed a solution on Twitter.

The Trump administration has argued that tariffs on Chinese goods would force China to trade on more favorable terms with the United States.

In its letter this week to the Office of the U.S. Trade Representative, Apple said that "because all tariffs ultimately show up as a tax on United States consumers, they will increase the cost of Apple products that our customers have come to rely on in their daily lives".

It said some of the parts it relies on for product development, including processors and research equipment, would also be hit by the tariffs.

The suggestion that Apple could easily move all of its manufacturing to the US doesn't quite match up with the realities of the consumer electronics industry, which depends on China's significantly lower wages as well as the country's massive manufacturing infrastructure.

Apple, in pushing back on the tariff proposal, said it bought more than $50 billion worth of components from US-based suppliers past year and that it's the largest U.S. corporate tax payer.

The Trump administration has placed punitive tariffs on $50 billion in Chinese goods and threatened to tax all Chinese imports to the United States.

If the US President goes through with his threat, it would substantially escalate his trade war with Beijing, especially since China has itself said it could retaliate, including taking action on US companies operating in its territory. Apple said it was "difficult to see" how tariffs would advance the government's goal.

Chinese exports to the United States rose to US$44.4 billion in August, a 13.2 per cent increase from the same period past year, according to customs data.

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