After President Trump revealed his plans Friday to impose an additional $267 billion in tariffs on Chinese goods, he challenged the company to make more products in the U.S. to avoid effects of the trade war. The tweet was released Saturday, and now, just two days later, Reuters reports that the company’s supplier shares in China are already dropping.
Reportedly, shares of Apple supplier companies Luxshare Precision Co. Ltd., Shenzhen Sunway Communication Co. Ltd., and Suzhou Dongshan Precision Manufacturing Co. Ltd. have already dropped up to 10 percent. Other suppliers of technology for the company also dropped 4 to 8 percent as of Monday.
The threatened tariffs came after Apple reported that prices on popular items such as AirPods and Apple Watch would substantially increase as a result. The Washington Post reports that earlier in the week after news hit that the U.S. planned to impose an initial $200 billion in tariffs on China, the company warned that prices on a wide range of popular Apple items would increase for American consumers as a result.
“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,” said the company.
Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting! #MAGA— Donald J. Trump (@realDonaldTrump) September 8, 2018
In the president’s tweet, he urged Apple to cut ties with foreign technology suppliers and create their products in the U.S. to avoid steep taxes. So it should come as no surprise that after the president’s recent tweet, effects are already starting to take place abroad.
“People are in a bit of a panic today. Looking forward, the focus would be on how the market reacts after Apple releases its latest models,” said Kevin Chung, an analyst at JihSun Securities Investment Consulting.
Thursday, a Chinese ministry spokesperson, Gao Feng, warned that China would be ready to retaliate if the threated tariffs by America were to take place, USA Today reports. Apparently, China has estimated $60 billion in American goods to be taxed if the country receives the tariffs that have been promised. As of September 6, the U.S. and China have already imposed more than $50 billion in tariffs on each others’ products.
“China is confident, capable and able to maintain steady and healthy development of the Chinese economy,” Gao Feng said.
Tim Cook, chief executive of Apple, has apparently lobbied the president in a diplomatic manner for months, trying to negotiate with the president on taxes and trade. He has sat down at dinners with the president in hopes to affect his policy decisions.