The Industry

Trump Threatens 10 Percent Tariff on iPhones

CEO Tim Cook previously said he was confident that tariffs would not affect the iPhone.
CEO Tim Cook previously said he was confident that tariffs would not affect the iPhone.
Spencer Platt/Getty Images

President Trump signaled in a Wall Street Journal interview on Monday that he is expecting to place tariffs on all Chinese imports, including potentially the iPhone and other Apple products, if negotiations at the upcoming G20 summit with President Xi Jinping fall through. “I can make it 10 percent and people could stand that very easily,” Trump said of price increases resulting from possible tariffs on iPhones, Macs, and other devices.

The U.S. is set to raise tariffs from 10 percent to 25 percent on $200 billion of goods imported from China beginning on January 1, though Chinese officials at G20 are expected to try to dissuade Trump from this plan. Trump, however, told the Journal that it is “highly unlikely” that China will be able to sway him.

This tariff hike alone would hit the Apple Watch, the Apple Pencil, AirPods, the HomePod, and the Mac Mini. If negotiations do not go well for the U.S., Trump claims that he will place either a 10 or 25 percent tariff on the rest of the $267 billion of Chinese imports that are not currently taxed, such as iPhones.

Asked what U.S. businesses that may be affected by the tariffs should do, Trump said, “Well, what I’d advise is for them to build factories in the United States and to make the product here.” Apple has not responded to the President’s comments, though the company sent a letter to the U.S. trade representative in September noting that the tariff hike scheduled for January 1 would give foreign competitors the upper hand. “Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers,” the letter read, in part. Apple has dozens of suppliers in China, where the iPhone and other devices are produced.

Apple CEO Tim Cook told CNN in June that he wasn’t concerned about the possibility of tariffs on the iPhone. “I don’t think that [the] iPhone will get a tariff on it,” he said. “Based on what I’ve been told and what I see, I just don’t see that,” Cook added, apparently referencing talks he’s had with Trump.

The iPhone accounted for 59 percent of Apple’s revenue for the most recent quarter. Even without the potential tariff, iPhones are already more expensive than they’ve ever been, with top-of-the-line models like the iPhone XS costing about $1,000.