Donald Trump exempts smartphones, laptops, chips in China tariff backdown

The Trump administration has exempted a raft of consumer electronics from its punishing import tariffs – offering relief to US tech firms and partially dialling down a trade war with China.

A notice late on Friday (Saturday NZT) by the US Customs and Border Protection office said smartphones, laptops, memory chips and other products would be excluded from the global levies President Donald Trump rolled out a week ago.

Retaliatory Chinese import tariffs of 125% on US goods took effect on Saturday, with Beijing standing defiant against its primary trade competitor.

Exempted products account for 20% of Chinese imports

The exemptions will benefit US tech companies such as Nvidia and Dell, as well as Apple, which makes iPhones and other premium products in China.

The backdown will generally narrow the impact of the staggering 145% tariffs Trump has imposed on Chinese goods entering the United States.

US Customs data suggests the exempted items account for more than 20% of those Chinese imports, according to senior Rand researcher Gerard DiPippo.

‘Screwing in little screws’

Trump hinted at exemptions when he spoke to reporters late Friday on Air Force One. “There could be a couple of exceptions for obvious reasons, but I would say 10% is a floor,” Trump said.

Despite the backdown, White House press secretary Karoline Leavitt said Trump “absolutely” believes iPhones can be made in America. Photo / Getty Images

Earlier, administration officials said the tariffs on China would encourage the manufacturing of electronics in the US. Commerce secretary Howard Lutnick last Sunday told CBS News that “great American workers” would build and operate new factories in the US and an “army of millions and millions of human beings screwing in little screws to make iPhones, that kind of thing, is going to come to America”.

White House press secretary Karoline Leavitt defended the statement and said “absolutely” Trump believes iPhones can be made in America.

Tech relief

Daniel Ives, senior equity analyst at Wedbush Securities, called the US exemptions the “best news possible” for tech investors.

The exclusions remove “a huge black cloud” that had threatened to take the US tech sector “back a decade” and significantly slow AI (artificial intelligence) development, Ives said in a note.

Many of the exempted products, including hard drives and computer processors, are not generally made in the United States and Trump argues tariffs are a way to bring domestic manufacturing back.

Commenting on the exemptions announcement, White House press secretary Karoline Leavitt insisted that the likes of Apple and Nvidia were still “hustling to onshore their manufacturing in the United States” as soon as possible.

Many analysts, however, say it will likely take years to ramp up domestic production.

Trade war fears

Washington and Beijing’s escalating tariff battle has raised fears of an enduring trade war between the world’s two largest economies and sent global markets into a tailspin.

The fallout has sent particular shockwaves through the US economy, with investors dumping government bonds, the dollar tumbling and consumer confidence plunging.

Adding to the pressure on Trump, Wall Street billionaires – including a number of his own supporters – have openly criticised the whole tariff strategy as damaging and counter-productive, while key ally Elon Musk has reposted pro-free trade comments on X, formerly Twitter, and attacked Trump’s senior trade adviser Peter Navarro as “truly a moron”.

China ‘not afraid’

Even with Washington and Beijing going toe to toe and financial markets in turmoil, Trump has remained adamant that his tariff policy is on the right track.

Beijing, meanwhile, has vowed not to give in to what it sees as bullying tactics, and – in his first comments on the tensions – President Xi Jinping stressed on Friday that China was “not afraid”.

Economists warn the disruption in trade between the tightly integrated US and Chinese economies will increase prices for consumers and could spark a global recession.

China’s Commerce Minister Wang Wentao told the head of the World Trade Organisation (WTO) that US tariffs will “inflict serious harm” on poor nations.

“The United States has continuously introduced tariff measures, bringing enormous uncertainty and instability to the world, causing chaos both internationally and domestically within the US,” Wang told WTO chief Ngozi Okonjo-Iweala in a call.

The White House says Trump remains “optimistic” of securing a deal with China, although administration officials have made it clear they expect Beijing to reach out first.

– Agence France-Presse. With reporting by Herald staff