President Trump has cast a formidable shadow in the days leading to Apple’s big iPhone event on Wednesday.
Over the weekend, he suggested in a tweet that Apple move its manufacturing plants to the U.S. to avoid tariffs in the simmering trade war between the U.S. and China. It’s a recurring threat Apple Chief Executive Tim Cook has heard from the White House, but a particular distraction in the days leading up to news of three new iPhones.
“There is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now,” Trump tweeted. “Exciting!”
Apple (AAPL) gleaned nearly 20% of its total fiscal 2017 revenue, or $44.8 billion, from China. That’s three times more than runner-ups, Intel (INTC), which hauled in $14.8 billion, and Qualcomm (QCOM), at $14.6 billion. Underscoring Apple’s reliance on the region, nearly every iPhone is built in China.
Sales of iPhone accounted for 56% of Apple’s $53.3 billion in third-quarter revenue for the three months ended June 30.
Trump’s latest tariff go-around is especially troubling since consumer-electronics devices like iPhone have been spared from the product list.
Last week, Apple said in a letter to U.S. Trade Representative Robert Lighthizer that Trump’s proposed tariffs on $200 billion worth of Chinese goods would amount to a 25% tax on products such as AirPods, Apple Watch, HomePod, and others shipped to the United States, and those costs would likely be passed to customers.
“It is difficult to see how tariffs that hurt U.S. companies and U.S. consumers will advance the government’s objectives with respect to China’s technology policies,” Apple said in the Sept. 5 letter.
Cook met with Trump last month, and complimented Apple’s CEO for “investing big dollars in U.S.A.” But the president told reporters Friday that imposing tariffs on $200 billion worth of Chinese products “will take place very soon depending on what happens.”
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