Fact Checked

Proposed tariffs could raise prices on Apple and other products

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Apple Inc. says proposed tariffs may affect prices on products in response to a proposal by the U.S. trade representative’s office for additional tariffs on Chinese goods.

The Office of the United States Trade Representative, which is responsible for negotiating trade agreements, proposed tariffs of up to 25% on $200 billion worth of Chinese imports. The Trump administration has already approved tariffs of $50 billion on Chinese goods.

According to Apple, this latest round of proposed tariffs could affect the price of some Apple products, including the Apple Watch, MacBook internal keyboards and AirPods headphones, which all could be impacted by the tariffs on China.

“Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers,” Apple wrote in comments to the U.S. trade representative’s office.

But Apple isn’t the only company to react. Other companies — like Intel Corp. and Trek Bicycle Corp. — could also be impacted and may need to raise prices if the new tariffs on Chinese goods are enacted.

What does this mean?

President Donald Trump has long claimed that China uses unfair trade practices that can put U.S workers at a disadvantage. Levying tariffs on Chinese imports has been one of his administration’s responses to the issue.

One possible theory: Raising prices on Chinese imports could discourage U.S. manufacturers from working directly with Chinese companies or with suppliers that source from China. This, in turn, could incentivize the use of U.S. goods and create more jobs in the U.S.

The impact of the proposed tariffs could reach far beyond China. Many companies have warned that their manufacturing costs would increase, which they argue could leave them with little choice but to raise the prices they charge consumers in the U.S.

Apple is a notable company to speak out against the proposed tariffs. The tech giant warned that in addition to affecting prices for the Apple Watch, MacBook internal keyboards and AirPods headphones, the proposed tariffs could also lead to higher prices for accessories like chargers and cases for iPhones and iPads.

Trump shot back at Apple on Twitter, urging the tech giant to make their products in the U.S. instead of China.

But Apple isn’t the only one to complain about the tariffs. The Office of the U.S. Trade Representative received more than 6,000 comments on the most recent tariffs proposal.

For example, Intel Corp., whose products are used in technology devices, also warned of price hikes. In comments submitted to the U.S. trade representative’s office, Intel pointed to a study from the Consumer Technology Association that estimates a 25% tariff on wireless telecom equipment and printed circuit assemblies would lead to a 6% increase in the price of consumer goods using these components.

Trek Bicycle Corp. also wrote to the agency, saying the tariffs would cost the company an additional $30 million each year.

Why does this matter?

The proposed tariffs could backfire, critics say.

Many companies in the U.S. are concerned that their manufacturing costs would go up. When a company’s expenses increase, the price of consumer goods typically follows.

But Apple is concerned increased costs would disadvantage them as compared with its foreign competitors, which may not be facing the same threat of tariffs. Apple projects this could diminish the economic benefit Apple provides in the U.S. and increase the cost of Apple products for U.S. consumers.

Some companies could respond by cutting jobs to make up for the loss in sales.

What can you do?

If the Office of the U.S. Trade Representative goes through with this new round of proposed tariffs, there’s a good chance prices will go up if some of your favorite products are impacted. Here are a few money-saving strategies:

  1. Pay attention to which products are affected by the tariffs. Apple warned that it may raise the cost of certain products, but other popular devices like iPhones and iPads appear to have escaped this round of possible price hikes.
  2. Buy before possible price hikes. If you’ve been planning to buy a new Apple Watch or Trek bicycle, now could be the time. Waiting to see what happens with the tariffs, many companies may not have raised their prices.
  3. Shop for alternatives. If prices go up on products you need and you’re looking to save money, you might want to consider shopping around for an alternative.

About the author: Tim Devaney is a personal finance writer and credit card expert at Credit Karma. He’s a longtime journalist who prides himself on being a good storyteller who can explain complex information in an easily digestible wa… Read more.