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Apple CEO Tim Cook. Photo: Bloomberg
Apple CEO Tim Cook. Photo: Bloomberg

Apple Watch, other products will cost more on US-China trade war

AirPods headphones and the HomePod smart speaker also face levies as part of proposed 10% tariffs on $200 billion worth of Chinese goods

San Francisco/Bengaluru: A “wide range" of Apple Inc products including the Apple Watch would be affected by proposed US tariffs on Chinese goods, the company told US trade officials, without mentioning any potential impact on its iPhone cash cow.

Apple does not disclose specific revenues for most of the affected products, but the Apple Watch may be the biggest seller. It brought in about $6.1 billion in revenue last year, according to an estimate from analyst firm Bernstein, a small portion of Apple’s $229 billion in overall sales.

AirPods headphones, some of Apple’s Beats headphones, and its new HomePod smart speaker also face levies as part of proposed 10% tariffs on $200 billion worth of Chinese goods, according to an unsigned letter the company submitted on Wednesday to US officials as part of a public comment period.

“Our concern with these tariffs is that the US will be hardest hit, and that will result in lower US growth and competitiveness and higher prices for US consumers," Apple said in the letter.

Apple has not responded to requests for comment.

The letter did not mention the iPhone, which accounted for about two-thirds of its $229 billion in revenue in its most recent fiscal year. The letter also made no mention of Apple’s iPad, which brought in $19.2 billion in sales in the most recent year, or most of its Mac computers, which generated $25.8 billion.

Apple did say its MacMini, a low-priced computer that comes without a keyboard or mouse, would be affected.

Many Apple accessories, such as mice, keyboards, chargers and even leather covers for iPhones and iPads would face tariffs, Apple said.

Reuters had reported that the Apple Watch was likely to be affected by the tariffs.

Shares of the iPhone maker slipped 1% in extended trading.

Apple also said that computer parts for its US operations would be hit by the tariffs. The company said that “main logic boards with microprocessing units" could face levies, along with equipment used for research and development.

On Apple’s most recent earnings call in July, Chief Executive Tim Cook said the company could face such tariffs “related to data centres."

But US President Donald Trump said aboard Air Force One on Friday that he is considering tariffs on a further $267 billion worth of Chinese goods that could encapsulate more products.

In its letter, Apple argued that the way US trade officials calculate the US trade balance — attributing the entire value of a product to a country like China where final assembly happens — fails to reflect the true value that Apple generates in the US. The company noted it spent $50 billion with 9,000 US suppliers in its most recent fiscal year, including Texas-based chip firm Finisar Corp and Kentucky-based Corning Inc.

“It is difficult to see how tariffs that hurt US companies and US consumers will advance the Government’s objectives with respect to China’s technology policies," Apple said in its letter.

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