In a stunning U-turn, the Trump administration has exempted Apple’s iPhones from tariffs in the US-China trade war, avoiding a significant price hike for American consumers and shifting the dynamics of the trade talks.
In a stunning move, the US customs messaging note revealed that the code ‘8517.13.00.00’ represents smartphones, including those made by Chinese manufacturer ‘smartphones’ , and is exempt from the 125% tariff on goods entering the country from China. This exemption means that the single biggest Chinese export to America by value last year will not be subject to import taxes, alongside other electronic devices and components.
The US-China trade war refers to the ongoing trade tensions between the two nations.
The conflict began in 2018, with the US imposing tariffs on Chinese goods worth $50 billion.
China retaliated by imposing its own tariffs on US goods.
The dispute centers around issues such as intellectual property theft, technology transfer, and market access.
According to a report by the Peterson Institute for International Economics, the trade war has cost both countries significant economic losses.
In 2020, the US-China trade deficit stood at $345 billion.
The inclusion of ‘smartphones’ in the exemption list has significant implications for the US-China trade war. If Apple had been affected by the tariffs, it would have started to show in weeks at most across American Apple stores, leading to a ‘sticker shock’ for the White House’s tumultuous tariff push. With 80% of Apple‘s iPhones intended for US sale made in China, this exemption avoids a significant increase in prices.
Tim Cook, Apple‘s chief executive, plays a crucial role in connecting the two economies. His deep expertise in just-in-time supply logistics makes him an ideal mediator between the US and Chinese governments. It is not out of the question that Cook could broker peace in the trade war.
Tim Cook is an American business executive who has been the CEO of Apple Inc. since 2011.
Born in 1960, he graduated from Auburn University with a degree in industrial engineering.
Cook's career began at IBM, where he worked for 12 years before joining Intelligent Electronics as the vice president of merchandising.
In 1998, he joined Apple and held various positions until becoming COO under Steve Jobs' leadership.
After Jobs' departure, Cook took over as CEO, transforming Apple into one of the world's most valuable companies.
The White House has been forced to reevaluate its approach to the trade war. Weekend reports suggest that trade hawk ‘Pete Navarro’ is being sidelined in favor of US Treasury Secretary Scott Bessent, who is now leading negotiations with trade partners seeking to avoid the reapplication of tariffs after a 90-day pause. The Trump administration’s bond market concerns have led to a U-turn on its original plan, which aimed to bring back iPhone production to the US.
The exemptions list has revealed that there are other big winners from the trade agreements. Countries with massive trade surpluses from electronics manufacturing, such as ‘Taiwan’ and ‘Vietnam’ , now have their exports exempt from tariffs. The new tariff equation offers an effective discount through exemptions, giving a significant advantage to nations with large trade surpluses.
The White House’s U-turn on the original plan has been described as ‘the art of repeal.’ The administration’s sudden change in stance has left many wondering what incentives other nations will have to offer. With the US negotiating with bond markets and itself, the rest of the world is watching how this plays out.
The exemptions list marks a significant shift in the US-China trade war. The White House’s initial plan aimed to bring back iPhone production to the US, but instead, ‘Apple’ ‘s iPhones have been exempted from tariffs. This move has left many questions unanswered, including what will happen next and how other nations will respond to the new dynamic in the trade talks.
