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The Trump administration has made a significant decision to exclude smartphones and other consumer electronics from steep “reciprocal” tariffs. This move is seen as a boost for Big Tech as the White House aims to calm global markets amidst a multifront trade war.
Customs and Border Patrol posted a notice late on Friday night announcing that smartphones, routers, chipmaking equipment, wireless earphones, and certain computers and laptops would be exempt from reciprocal tariffs, including the 125% levies imposed on Chinese imports by Donald Trump.
This exemption is particularly beneficial for companies like Apple, Nvidia, and Microsoft. It comes after a week of market turbulence following Trump’s initiation of a trade war on April 2, causing global investors to react and triggering a stock market downturn.
The announcement of this exemption is the first indication of any potential softening of Trump’s tariffs against China. While he paused the steepest “reciprocal” tariffs, retaining 10% tariffs on most trading partners, the administration is still planning to apply tariffs to certain sectors.
Despite exempting several sectors from reciprocal tariffs, including semiconductors and pharmaceuticals, Trump has indicated intentions to impose tariffs on those sectors as well.
Apple stands to benefit greatly from this exemption, given that a significant portion of its supply chain is based in China. The majority of iPhones are manufactured in a large factory complex in Zhengzhou operated by Apple’s manufacturing partner Foxconn.
Following Trump’s announcement of reciprocal tariffs, Apple’s market value experienced a significant decline, with about $700bn being wiped off in just a few days.
Trump had previously stated that he would consider excluding US companies from his tariffs, although decisions would be made on an “instinctive” basis.
Chad Bown, a senior fellow at the Peterson Institute for International Economics, noted that these exemptions for smartphones and consumer electronics are reminiscent of similar exemptions issued by Trump during previous trade wars.
While the exemptions are currently in place, it remains to be seen if they will persist or if the president will reverse course in the future.
US Customs and Border Protection has redirected inquiries about the order to the US International Trade Commission, which has not yet responded to requests for comments.
The White House has confirmed that these new exemptions do not apply to the 20% tariffs on all Chinese imports imposed by Trump in response to China’s involvement in fentanyl manufacturing.
White House spokesperson Karoline Leavitt stated that companies like Apple, TSMC, and Nvidia are expediting their efforts to onshore manufacturing in the US under the direction of the President.
Apple declined to provide a comment on the matter.
Economists have expressed concerns about the broad impact of Trump’s tariffs, warning that they could lead to increased US inflation and negatively impact economic growth.
John Williams, the chief of the New York Fed, has suggested that US inflation could rise as high as 4% as a result of these tariffs.
Additional reporting by Michael Acton in San Francisco