Wednesday 18 September 2019

Trump rejects Apple's request for Mac Pro exemption from tariffs


US President Donald Trump. Photo: REUTERS/Mary F. Calvert
US President Donald Trump. Photo: REUTERS/Mary F. Calvert

Joshua Gallu, Mark Gurman and Mark Niquette

US President Donald Trump has rejected Apple's bid to avoid tariffs on some computer parts it manufactures in China, saying the company should instead make the components in America.

The Cupertino, California-based technology giant had asked the Trump administration to exclude key components that make up the forthcoming Mac Pro high-end desktop computer from 25pc import tariffs, weeks after planning to relocate production of the line to China from Texas.

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An Apple spokesman declined to comment, but the company previously said that "final assembly is only one part of the manufacturing process".

The new Mac Pro will be manufactured in China, a person familiar with the company's plans said last month, shifting production of what had been Apple's only major device assembled in the US.

Apple's request for a tariff exemption confirms that plan. The previous design had been built in Texas since 2013.

The new model was announced in June and will go on sale later this year, starting at $5,999 (€5,395).

Apple filed requests for exclusions from the 25pc tariff on 15 components or products. There is an open comment period until August 1, before the administration would consider the requests, and the company has seven days to reply to each comment.

The requests have started to draw opposition from the public. An online comment posted by Bill Smith said Apple willingly elected to move production to China knowing that tariffs were in place.

"If Apple wishes to avoid tariffs, it should continue to manufacture in the US," Smith wrote. "If it does not want to pass the cost of tariffs on to the consumer, Apple can hold its prices constant."

Separately, Trump has encouraged Apple chief executive Tim Cook to move operations from China to the US, Larry Kudlow, the president's chief economic adviser, told reporters on Friday at the White House.

The Mac Pro has historically been one of Apple's lowest-volume computers, and given its already high price point, the tariffs on this particular product should not have a significant impact on the firm's bottom line. The company reports earnings on July 30 and executives are likely to be asked about Apple's supply chain in light of trade tensions between the US and China.

Apple is also seeking duty exclusions on its Magic Mouse and Magic Trackpad, complementary devices for operating the computer, as well as an accompanying USB cable for charging external mobile devices.

Apple earlier had products spared from duties, including the Apple Watch and AirPods, while the iPhone, the company's core product, has not yet been significantly impacted.

Trump slapped tariffs on $250bn of Chinese goods last year, launching a trade war over long-standing US allegations of unfair economic practices, including the theft of American intellectual property.

After the president threatened to impose tariffs on an additional $300bn of Chinese goods, Apple said in a letter last month that they would affect nearly all major products and reduce the company's contribution to the economy. Those additional tariffs have not been imposed yet.

The administration has previously promised relief if companies can show that parts or products can only be obtained in China, are not "strategically important" to Chinese industrial programmes, or that the duties would cause "severe economic harm".


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