Trump's latest stunner takes Apple off the hook as phones, other electronics get a tariff exemption
Despite previously saying that there would be no exemptions to his new tariffs, President Donald Trump has decided to exempt phones, chips, computers, and other electronics from the new tariffs put in place by Trump earlier this month. This includes the 125% tariff on China and the baseline 10% tariff on other U.S. trade partners. The U.S. Customs and Border Protection published the exclusions late Friday night.
The products being excluded include smartphones, laptops, processors, and memory chips. These devices are made outside of the U.S. and face a tariff when shipped into the U.S. The American company that benefits the most from the latest stunning reversal by Trump is Apple which assembles many of its products in China, including the iPhone. With the 125% tariff still in effect for goods imported from China even after his 90-day pause on the original tariff rates, without this exemption, Apple would have faced a big decision.
Had Trump not decided on these exemptions, Apple would have had to decide whether to pay all of the tariffs and keep prices unchanged, pay a portion of the tariffs and pass the rest on to consumers in the form of higher prices, or pass on to consumers all of the import tax which would have led to the most shocking price hikes. Some analysts were calling for iPhone prices in the U.S. to double or even triple once previously imported inventory from China ran out.
The exemption also helps other foreign manufacturers who ship their devices into the U.S. such as Samsung. While the company manufactures the majority of its phones in Vietnam, it still faced a 10% tariff on handsets shipped to the U.S. until the exemption was announced. The same applies to Google. While some Pixels are still built in China, Google also has its phones assembled in Vietnam and in India. Over the next three years, Google hopes to move the majority of its Pixel production to India.
Another pair of winners would be Dutch chipmaking equipment maker ASML and TSMC, the world's largest chip foundry. Among the products exempted from the new tariffs is equipment used to make semiconductors which also would include the lithography machines made by ASML and purchased by firms like TSMC.
While the tech companies shipping devices into the U.S. are benefiting from the latest big tariff news, U.S. consumers might be the biggest beneficiary since it will allow them to continue to purchase the products they love without having to potentially shell out more money. Unless some other blockbuster news comes out before Monday's opening bell next week, stockholders of Apple will probably see the stock continue to rebound after it closed Friday's regular trading session at $198.15, up 4.06% or $7.73.
The tariff exemptions might be short-lived as a report says that it is a sign of an impending change in tariff amounts for those products being excluded which would include a lower import tax for Chinese goods imported into the U.S. All we can do is continue to monitor the situation and report any changes to you.
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