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Apple’s Mac Pro Tariff Relief Requests Advance Despite Trump Opposition

Sept. 19, 2019
Apple has applied for several of its products made in China to be made exempt from trade-war tariffs.

Some of Apple Inc. (IW500/2)’s requests to avoid tariffs on Chinese imports are advancing in the review process, even though President Donald Trump indicated he would reject them.

Ten of Apple’s 15 requests for exclusions from 25% duties have progressed into the third -- and almost final -- stage of review, according to the U.S. Trade Representative’s office. That means USTR didn’t reject the requests, and they will be approved as long as Customs and Border Protection determines it can administer the exclusion from the levies when the goods enter the U.S.

Trump had signaled that relief from tariffs would be rejected, saying in a July 26 tweet that “Apple will not be given Tariff waiver, or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs!”

But the president later told reporters “we’ll work it out” and that “I think they’re going to announce they’re going to build a plant in Texas.”

Bloomberg reported in June that Apple was shifting production of its new Mac Pro to China from a facility in Texas. The company hasn’t suggested there’s plans for new factories in the state, though Apple has said it will expand its local headquarters there.

Apple’s requests were for goods that are part of $200 billion in Chinese products hit with tariffs last September. Trump increased the duty on that batch to 25% from 10% in May. The rate is due to rise to 30% on Oct. 15, including on another $50 billion of goods also hit last year.

Trump ordered duties on about $300 billion of essentially all remaining Chinese imports starting Sept. 1 but he delayed imposition on some consumer products until Dec. 15. Apple has said those duties would affect nearly all of its major products, including iPhones, iPads, MacBooks, Apple Watches, AirPods, and the iMac.

Magic Mouse, Trackpad

The Cupertino, California-based technology giant had so far asked for exclusions on Mac Pro parts and accessories, as well as its Magic Mouse and Magic Trackpad. Requests for tariff relief for the overall exterior enclosure and some key internal components for the Mac Pro have advanced, while requests for wheels and other components are still under a substantive review by USTR.

After a dinner with Apple Chief Executive Officer Tim Cook on Aug. 16, Trump also said Cook made “a good case” about the difficulty in competing with Samsung Electronics Co. because its products, unlike Apple’s, wouldn’t be subject to tariffs on imports into the U.S.

Asked about the tariff exclusion requests on a July 30 earnings call, Cook said they are part of a desire to continue making the Mac Pro in the U.S., and that the company is “working and investing currently in capacity to do so.” That implies Apple could be seeking to manufacture the parts needed for the Mac Pro in China and then conduct final assembly in the U.S.

Severe Harm

Exclusion decisions are based on whether a product is available only from China, is strategically important or related to Chinese industrial programs, and whether duties will “cause severe economic harm” to the company or U.S. interests, USTR has said.

In its 15 requests for exclusions posted July 18, Apple said the devices or components are not related to Chinese industrial programs -- and that “there are no other sources for this proprietary, Apple-designed component.”

Chinese working-level trade officials are in Washington this week to prepare for a meeting of top negotiators next month as the world’s two-largest economies continue discussing a deal to end their more than yearlong trade war.

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