Trump’s New China Tariffs Won’t Affect Apple’s Watch, AirPods, Other Products

September 17, 2018, 10:57 PM UTC

The Trump Administration followed through on the President’s pledge to impose a new tariff on as much as $200 billion in goods made in China, but one high-profile company that pushed against the move has been given an exemption: Apple.

The U.S. government issued a final list of the products that will be affected by the new tariffs. Among products missing from the list are the Apple Watch and AirPods, along with smart watches and fitness trackers made by other companies such as Fitbit. The exemptions were first reported earlier Monday by Bloomberg.

Earlier this month, Apple sent the Trump Administration a letter warning that tariffs could lead to higher prices for Apple products, including the Watch, AirPods, the HomePod and certain accessories. Apple didn’t specify that the iPhone, its biggest-selling product, would be affected.

“Because all tariffs ultimately show up as a tax on US consumers, they will increase the cost of Apple products that our customers have come to rely on in their daily lives,” said Apple’s letter. Trump replied with a tweet urging Apple to build more manufacturing plants in the U.S.

Before that exchange, Trump and Apple CEO Tim Cook had dinner at Trump’s golf club in Bedminster, N.J. to discuss the impact that tariffs would have on parts that Apple buys in China. Cook also visited the White House in May to discuss his concerns, when administration officials reportedly assured him that new tariffs would not affect the iPhone.

The new 10% tariffs are in addition to $50 billion worth of Chinese goods facing tariffs imposed earlier this year. They will take effect on Sept. 24 and rise to 25% by the end of 2018. Nearly half of all Chinese imports to the U.S. will be subject to the tariffs. The White House says it’s prepared to impose tariffs on another $267 billion in Chinese imports if China retaliates.

“Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection,” Trump said in a statement.

Apple’s stock closed Monday down 2.7% at $217.88 a share. Fitbit closed down 1.1% at $5.45 a share. Trade tensions have weighed on the stock market ahead of the expected tariff announcement, with the S&P 500 Index falling 0.6% to 2888,80 Monday.

Even if the iPhone, Apple Watch and other products aren’t subject to U.S. tariffs, Apple is still vulnerable to rising U.S.-China trade tensions. An analyst at Moor Insights & Strategy told the Wall Street Journal that retaliatory moves by China “could be fairly devastating” in the long term if China restricts sales of manufacturing parts to U.S. companies.