Apple warns Trump that tariffs would hurt its competitiveness

Trump supporters wave Apple product as the US president walks on stage for a rally in Rochester, New York. Photo / Getty.

Apple has warned that proposed tariffs on imports of iPhones and its other flagship products from China to the US would "tilt the playing field" in favour of its overseas rivals and dent its multibillion-dollar contribution to the American economy.

The iPhone maker's stark warning is just one of hundreds of submissions to the US Trade Representative from global manufacturers, small businesses and individual Americans, many of them in vehement opposition to the Trump administration's proposed rise in import duties.

In a letter that was made public on Thursday, Apple pressed the White House to abandon tariffs of up to 25 per cent on its products including iPhones, iPads, Macs, Apple Watch and AirPods, as well as parts used in device repairs.

The extra duty, if passed on to consumers, could add hundreds of dollars to the cost of Apple's high-end products.

"We urge the US government not to impose tariffs on these products," Apple wrote in its letter to the USTR, as part of its consultation on the proposals.

Apple alluded to its Chinese rival Huawei as it warned that competitors who do not have a "significant presence in the US market" would "not be impacted" by the tariffs. "A US tariff would therefore tilt the playing field in favour of our global competitors," it said.

The letter follows a report from the Nikkei Asian Review this week that Apple has asked its suppliers to explore moving as much as 30 per cent of its production capacity out of China, as a result of the two countries' escalating trade dispute.

But many US technology companies are unable to make such drastic changes to their supply chain, which could take years to complete.

The Consumer Technology Association, a trade group, warned that $167bn in annual imports from China among its members would be affected.

"It is not easy for CTA member companies to simply 'move' supply chains," the organisation told USTR. "No one wins a trade war and an escalating tariff fight will inflict immense damage on American businesses, workers and consumers."

The tariffs would undermine efforts to increase access to digital technology and harm American companies' ability to lead in emerging fields such as augmented and virtual reality, the CTA added.

In joint submission asking for a reprieve on laptop and tablet imports, Dell, HP, Intel and Microsoft said the proposals "threaten to disproportionately harm multiple US interests" but would "not address the underlying Chinese trade practices" that the USTR sought to remedy.

"These price rises will hit during peak holiday and back-to-school demand seasons," the four tech groups added.

Individual submissions to the consultation voiced similar concerns.

Todd Gormick of San Clemente, California, a declared supporter of President Trump whose company makes children's scooters, warned the tariffs "are likely to put our entire company of 100 people 'Out of Business' . . . producing in the USA isn't really an option".

Apple said in its letter that it is "on track" to make a $350bn "direct contribution" to the American economy over five years, a target first disclosed last year following the passage of US tax reforms. The Silicon Valley-based company, which says it is already the largest US corporate taxpayer, is opening new facilities across the country, including a new campus in Austin, Texas, and plans to add thousands of new jobs.

But Apple said those growth plans were now at risk. "US tariffs on Apple's products would result in a reduction of Apple's US economic contribution," it wrote.
The escalating trade war has already hit iPhone sales in China, Apple warned earlier this year.

Copyright The Financial Times Limited 2019