Published: Wed, September 12, 2018
Economy | By

Apple faces Trump's ire after company says tariffs would hurt products

Apple faces Trump's ire after company says tariffs would hurt products

A growing number of Chinese companies are adopting a crafty way to evade US President Donald Trump's tariffs: remove the "Made in China" label by shifting production to countries such as Vietnam, Serbia and Mexico.

On August 31, Ford announced it was canceling plans to ship the Focus Active to the USA from China - citing new tariffs on Chinese imports.

Trump took to Twitter Sunday to declare victory and write: "This is just the beginning".

"China-US trade frictions are accelerating the trend of the global value chain changing shape", said Cui Fan, research director at the China Society of WTO Studies, a think tank affiliated with the commerce ministry. Ford originally planned to make the next gen Focus Active - a cross hatchback version of the standard Focus to Mexico but changed those plans to make the economy auto in China instead. "We hope, instead, that you will reconsider these measures and work to find other, more effective solutions that leave the USA economy and USA consumer stronger and healthier than ever before".

As for Ford, the automaker in August said it was dropping plans to ship the hatchback-style Focus Active from China to America, citing Mr. Trump's new tariffs.

"It would not be profitable to build the Focus Active in the US given an expected annual sales volume of fewer than 50,000 units and its competitive segment", the company said in a statement, according to The New York Times. "As a result, tariffs will ultimately reduce the economic benefit we generate for the United States", Apple said.

On the companies front Primark owner Associated British Foods reaffirmed its full year guidance as it said that it expected to report a rise in full year like for like sales of 1.5% with United Kingdom stores helping drive the move higher.

But if Apple shifted to building its iPhones in the U.S. instead of China, it would require "20 percent price increases to offset the incremental labor costs", Bank of America Merrill Lynch told clients on Monday.

Some components for Apple products, including glass from manufacturers like Corning, are made in the United States, the company has said.

Shares of Apple are up 27% this year. Make your products in the United States instead of China.

In addition, USA stocks with a high exposure to China have underperformed the broader S&P 500 index since mid-June, when the White House announced the first tariffs.

Trump's threatened tariffs cover a total of $517 billion in Chinese goods, which would exceed last year's goods imports of $505 billion from China. That would pile more pressure on an economy that is already battling serious headwinds, they said. Trump slapped China-built autos with an additional 25 percent levy in July. The company is making iPhone display glass in Kentucky, and is setting up new plants in other areas.

Analyst Wamsi Mohan said that if Apple moves 10% of its iPhone assembly to the U.S., prices will rise by 8%. He said Japan will have a "big problem" if it doesn't conclude a new trade deal with the U.S. Last month, it added tariffs to another $16 billion in Chinese goods and is readying taxes on another $200 billion worth.

Like this: