President Trump just chilled the US smartphone market
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President Trump has said that all smartphones made outside of the US will be subject to a 25 percent tariff, adding to the cost of smartphones and likely to slow the market.
President Trump’s move started with a social media post Truth Social on May 23.
Trump posted: “I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff (sic) of at least 25% must be paid by Apple to the U.S. Thank your (sic) for your attention to this matter!”
Tim Cook is CEO of Apple.
When subsequently asked in the Oval Office during an executive order signing session whether he had the power to impose tariffs on a single company he said: “It would be also Samsung and anybody that makes that product, otherwise it wouldn’t be fair.” The tariffs will start at the end of June, the President added.
In recent years, as export controls for component parts being shipped to China became tougher, Apple has started to transfer significant amounts of electronic equipment manufacturing from China to India. However, Apple never appeared to consider the US as manufacturing location. Foxconn, amongst others, are investing in factories to support Apple production in India.
In February, soon after President Trump started his second term in office Cook said that Apple would invest US$500 billion over the next five years on manufacturing that would create 20,000 jobs in the US. At the time it was indicated that this would be for new product lines and would not effect the iPhone, iPad and Mac computers, which are assembled in Asia.
Analysts have been reported saying the price of iPhones could triple to US$3,500 if they have to be made in the US. It has also been reported that it could take Apple three years and cost US$30 billion to transfer 10 percent of its supply chain to the US.
As almost no smartphones are manufactured in the US President Trump is effectively suppressing the entire smartphone market there and this and could lead to a market of illicit smuggled smartphones.
Related links and articles:
Apple moves to its own modem silicon with the C1
Trump 2.0 economics turns Future Horizons bearish
President Trump says chip tariffs to start ‘very soon’
Samsung to start production of laptop rollable display
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