Trump admin to exclude some electronics from reciprocal tariffs

The iPhone 14, iPhone 14 Pro and iPhone 14 Pro Max are displayed at the Apple Fifth Avenue store, Friday, Sept. 16, 2022, in New York. —AP Photo/Yuki Iwamura, File

NASHVILLE, Tennessee — The Trump administration late Friday said they would exclude electronics like smartphones and laptops from reciprocal tariffs, a move that could help keep the prices down for popular consumer electronics that aren’t usually made in the US.

It would also benefit big tech companies like Apple and Samsung and chip makers like Nvidia and sets the stage for a likely tech stock rally on Monday.

US Customs and Border Protection said items like smartphones, laptops, hard drives, flat-panel monitors and some chips would qualify for the exemption. Machines used to make semiconductors are excluded too. That means they won’t be subject to the current 145 percent tariffs levied on China or the 10 percent baseline tariffs elsewhere.

READ: Trump presses on with 104% tariffs on China

It’s the latest tariff change by the Trump administration, which has made several U-turns in their massive plan to put tariffs in place on goods from most countries.

The exemption seemed to reflect the president’s realization that his China tariffs are unlikely to shift more manufacturing of smartphones, computers and other gadgets to the US any time soon, if ever, despite the administration’s predictions that the trade war prod Apple to make iPhones in the US for the first time.

But that was an unlikely scenario after Apple spent decades building up a finely calibrated supply chain in China. What’s more, it would take several years and cost billions of dollars to build new plants in the US, and then confront Apple with economic forces that could triple the price of an iPhone, threatening to torpedo sales of its marquee product.

Trump’s decision to exempt the iPhone and other popular electronics made in China mirrors the similar relief that he gave those products during the trade war of his first term in the White House. But Trump began his second term seemingly determined to impose the tariffs more broad this time, triggering a meltdown in the market values of Apple and other technology powerhouses.

The turmoil battered the stocks of tech’s “Magnificent Seven”—Apple, Microsoft, Nvidia, Amazon, Tesla, Google parent Alphabet and Facebook parent Meta Platforms. At one point earlier this week, the combined Magnificent Seven’s combined market value had plunged by $2.1 trillion, or 14 percent, from April 2 when Trump unveiled sweeping tariffs on a wide range of countries.

Some of the losses eased this past Wednesday when Trump paused the tariffs outside of China, paring the lost value in the Magnificent Seven to $644 billion, or a 4 percenr decline, from April 2. Now, the stage is set for another tech rally Monday when trading resumes in the US stock market, with Apple likely leading the way because the iPhones made in China remain the company’s biggest money maker.

The electronics exemption also should relieve consumer worries that the China tariffs would result in hefty price hikes on smartphones and other devices that have become essential tools of modern living,

It’s the kind of friendly treatment that industry was envisioning when Apple CEO Tim Cook, Tesla CEO Elon Musk, Google CEO Sundar Pichai, Facebook founder Mark Zuckerberg and Amazon founder Jeff Bezos assembled behind the president during his Jan. 20 inauguration. That united display of fealty reflected Big Tech’s hopes that Trump would be more accommodating than President Joe Biden’s administration’s and help propel an already booming industry to even greater heights.

Apple won praise from Trump in late February when the Cupertino, California, company committed to invest $500 billion and add 20,000 jobs in the US during the next four years. The pledge was an echo of a $350 billion investment commitment in the US that Apple made during Trump’s first term when the iPhone was exempted from China tariffs.

The move takes off “a huge black cloud overhang for now over the tech sector and the pressure facing US. Big Tech,” said Wedbush analyst Dan Ives in a research note.

Neither Apple nor Samsung responded to a request for comment Saturday. Nvidia declined to comment. The White House did not immediately respond to a request for comment on Saturday. —AP