Trump issues threat of 100% tariffs on chips, proposes possible resolution - Trump proposes a 100% tariff on chips and offers a potential solution
In a move aimed at avoiding potential price hikes for consumers, tech giant Apple is adopting several strategies to navigate the threat of 100% tariffs on semiconductor chips. If imposed, these tariffs could significantly increase electronics prices in the USA, leading to supply chain disruptions, increased production costs, and higher retail prices for consumers.
Apple's strategies include:
- Supply Chain Diversification: The company is accelerating efforts to move production and sourcing of components outside of tariff-affected countries, aiming to reduce reliance on Chinese or other targeted imports.
- Component Substitution: Engineering teams are exploring alternative chip suppliers or modifying device designs to use different or fewer tariffed components.
- Localization of Manufacturing: Increasing domestic manufacturing or assembly of products and components in countries not subject to tariffs to minimize tariff exposure.
- Customs and Compliance Strategies: Utilizing tariff exemptions, classification strategies, or legal appeals to reduce or eliminate the tariffs imposed on specific items.
These maneuvers are designed to protect profit margins and keep consumer prices competitive despite the heightened tariff risks.
The practical effect of the threat is ongoing uncertainty in the tech supply chain and potential inflationary pressure on electronics prices in the US market unless companies successfully adapt through these strategies.
Notably, the investments Apple plans to make in the USA—amounting to $100 billion over the next four years for expanding component production—could benefit existing US suppliers like glassmaker Corning. The special glass for the first iPhone in 2007 came from Corning's factory in Kentucky.
Meanwhile, high-tech chip systems for iPhones and other smartphones come almost exclusively from Taiwan's contract manufacturer TSMC, which has announced investments of $165 billion in US factories for some semiconductors. This development could see all iPhones and Apple Watches worldwide equipped with glass from the USA.
The announcement of these strategies comes in response to the threat of tariffs posed by former US President Donald Trump. Trump's announcement is seen as good news for large providers who can hope to be unaffected thanks to investment pledges. However, industry experts have expressed skepticism about Apple significantly shifting a large part of its value chain to the USA.
[1] Source: Various industry reports and Apple's official statements.
- The Commission, in light of the escalating trade tensions and tariff threats, has also been asked to submit a proposal for a directive on the protection of the environment, aiming to ensure technology companies, like Apple, minimize their carbon footprint during the restructuring and expansion of supply chains.
- In the political arena, the debate surrounding tech giant Apple's tariff-related strategies has expanded to include discussions on the role of technology in politics, with some questioning the impact of technological advancements on democratic processes and general news coverage.
