Apple CEO Tim Cook [left] with Donald Trump [right] at a Mac Pro factory
In a surprise announcement extremely late on Friday night, President Trump has exempted smart phones, computers, and chips from the so-called reciprocal tariffs, sparing Apple and others billions in import fees.
The exclusions published near midnight eastern time grant exemptions to products that would take years to develop in the US. Apple is greatly helped by the exemptions, with much of Apple’s product line now exempt from the 145% tariff applied.
Almost the entirety of Apple’s product line is now exempt from the enhanced tariffs. Computers, smartphones, monitors, flash memory, DRAM, and other storage like hard drives are exempt for the time being.
Other sectors are getting a break with cuts on video cards, flat panel televisions regardless of screen type, power supplies, and other finished goods.
And, the exemptions go beyond completed hardware. Imports of silicon chips are now exempt, and also exempt are the fabrication machinery needed to make semiconductors.
Some smaller items, like leather goods, Apple Watch bands, and iPhone cases, for example, did not get a reprieve. Nor did cabling, PC cases, aluminum, titanium, or steel.
The order applies to the initial 10% and the follow-up orders after China applied their own tariffs, but it has an odd specificity. The exclusion order is downstream of the initial order, leaving open the possibility of a new tariff on these products.
Trump and China have been in a tit-for-tat tariff battle, with each raising their respective tariffs in response to the other’s actions. While Trump started the hikes, he also raised the tariff on Chinese imports again to 145% after China raised its rates on imports from the US.
On Friday, China responded by declaring it would raise its tariff on U.S. goods imports from 84% to 125%. However, China also made it clear that it didn’t intend to raise tariffs more, even if the U.S. did so, but it would still enact some form of countermeasures.
White House press secretary Karoline Leavitt said on Friday that Trump is “optimistic” that the U.S. and China could strike a tariff deal. “The president has made it very clear he’s open to a deal with China,” Leavitt told the media.
Customers rushed out to buy iPhones before Apple could announce new pricing, but now, that may not have been necessary.
All of this may have come down to US Big Tech CEOs staying in President Trump’s good graces. Apple CEO Tim Cook played the long game and got the company in Trump’s head early on as a good example.
Cook donated $1 million to Trump’s inauguration fund and attended the event, plus in-person dinners, to help keep Apple in the front of the President’s mind.
Had the tariffs stayed in place for the iPhone 17 release season, analysts were floating the possibility of an iPhone 17 Pro costing $2000 or more. The situation remains fluid, and it remains to be seen how long the exemptions will stay in place, as they are as temporary as the initial orders were.
There does not appear to have been any negotiations with the Chinese government overnight. So far, on Saturday morning, both the White House and the Chinese government are quiet.
After-hours trading has not yet been impacted by the order.
