U.S. Customs and Border Protection recently issued new guidance. They’ve done so by exempting smartphones and computers from the recently announced 125%-ish tariffs on goods coming from China. This exemption comes hot on the heels of President Donald Trump’s imposition of tariffs. The change to CFIUS is likely to have a significant impact on the largest tech companies, as the biggest, Apple, makes most of its products in China.
The new guidance, which was addressed directly to the issue of reciprocal tariffs, is intended to ease this particular burden of cash flow on U.S. technology firms. Nevertheless, the government has chosen not to regulate smartphones and computers. The shift recognizes the likely impact on the technology industry, whose companies are increasingly reliant on Chinese manufacturing for their goods.
President Trump’s decision to impose such significant tariffs was based on a desire to face trade imbalances head-on and promote domestic production. As soon as these tariffs were threatened, industry leaders raised the alarm about their impact. They cautioned that higher costs for consumers would be inevitable and that innovation in the industry would be hampered.
Apple, one of the foremost manufacturers of smartphones and computers, might be hit especially hard by these tariffs. The firm produces nearly all its electronics in their factory in China. If it has to eat the cost of the tariffs, it will wipe out most of its profitable cost margins. This exemption from these tariffs could be a critical lifeline for Apple and other companies like them. It would allow them to continue to keep prices low for American consumers.
U.S. Customs and Border Protection has issued guidance recognizing the realities of today’s global supply chains. This shows that the government appreciates the realities of these complexities. Tariffs are a blunt instrument, but they can be a useful tool for forcing compliance with trade practices. They can cause unintended consequences for American businesses and consumers.