Trump tariffs: US President Donald Trump’s administration exempted smartphones, computers, and other electronics from its reciprocal tariffs, potentially cushioning consumers from sticker shock while benefiting US tech giants such as Apple Inc. and Samsung Electronics Co. The move also partially dialled down its escalating trade and tariff war with China.
The exclusions, published by the US Customs and Border Protection office, excluded smartphones, laptops, hard drives, computer processors, memory chips, and other products from the global levies Trump rolled out a week ago.
How do the exemptions benefit US tech giants?
The move narrows the scope of the levies by excluding products from Trump’s 125 per cent China tariff and his baseline 10 per cent global tariff on nearly all other countries. The exemptions will benefit US tech companies like Nvidia, Dell, and Apple – which makes iPhones and premium products in China. They will generally narrow the impact of the staggering 145 per cent tariffs Trump has imposed on Chinese goods entering the US.
The products not subject to Trump’s new tariffs also include machines used to make semiconductors. This would be important for Taiwan Semiconductor Manufacturing Co., which has announced a major new investment in the US and other chipmakers. Reports say the tariff reprieve may prove fleeting.
The exclusions stem from the initial order, which prevented extra tariffs on certain sectors from stacking cumulatively on top of the country-wide rates. The exclusion indicates the products may soon be subject to a different tariff.
One such exclusion was for semiconductors, which Trump has regularly pledged to apply a specific tariff. He has not yet done so, but the latest exclusions correspond with that exemption. According to Bloomberg, Trump’s sectoral tariffs have been set at 25 per cent, though it is still unclear what the new rates on semiconductors and related products would be.
Many exempted products, including hard drives and computer processors, are not made in the US, and Trump argues that tariffs are a way to restore domestic manufacturing. Commenting on the exemptions, White House Press Secretary Karoline Leavitt insisted that Apple and Nvidia were still “hustling to onshore their manufacturing in the US” as soon as possible. Many analysts say it will likely take years to ramp up domestic production.
US-China trade war
US Customs data suggests the exempted items account for more than 20 per cent of those Chinese imports. US and China’s latest escalating tariff battle has raised fears of an enduring trade war between the world’s two largest economies and sent global financial markets into a tailspin.
The fallout has sent shockwaves through the US economy, with investors dumping government bonds, the dollar tumbling, and consumer confidence plunging. Even with the US and China going toe-to-toe and financial markets in turmoil, Trump is adamant that the tariff policy is on the right track.
China has vowed not to give in to what it sees as bullying tactics, and — in his first comments on the tensions — President Xi Jinping stressed that China was “not afraid.” Economists warn the disruption in trade between the tightly integrated US and Chinese economies will increase consumer prices and could spark a global recession.
China’s Commerce Minister Wang Wentao told the head of the World Trade Organization that US tariffs will “inflict serious harm” on poor nations. The White House says Trump is “optimistic” about securing a deal with China, although administration officials have clarified that they expect China to reach out first.
