Donald Trump has just announced his intention to impose additional customs tariffs of 10% on Chinese imports upon his return to the White House, a measure that will affect the cost of technological products in the United States. It was on his favorite social network, Truth Social, that the Republican president indicated this. The main argument is based on… the opioid crisis that the USA has been going through since the 1990s, and more particularly that of fentanyl, which causes tens of thousands of deaths each year. Here is his statement:
“ I have had numerous discussions with China about the massive quantities of drugs, particularly fentanyl, being sent to the United States – but to no avail. Chinese officials told me that they were going to apply their maximum penalty, the death penalty, to any drug trafficker caught in the act, but, unfortunately, they never did. Drugs continue to flood our country, primarily through Mexico, at levels never seen before. Until they stop, we will impose an additional 10% tax on China, on top of all other taxes already in place, on all of their many products entering the United States of America “.
The mechanics of customs taxes: cascading effects on the global market
The arithmetic of customs taxes masks an economic complexity that is rarely explained. Contrary to popular belief, these measures do not directly penalize China, but create a domino effect that spreads far beyond American bordersalthough residents of the country will be the first affected.
In the case of Apple, the mechanism is particularly revealing: when the Californian company imports iPhones assembled in China, it must pay customs taxes directly to the US Treasury, mechanically increasing its import costs.
This increase in costs will place Apple in a strategic dilemma. The firm can either absorb these additional costs and reduce its margins – an unlikely option given its profitability policy – or pass them on in sales prices. However, Apple traditionally applies a consistent global pricing policy, avoiding excessively large differences between markets to limit parallel trade and maintain its premium brand image. An increase in prices in the United States would therefore probably lead to an overall tariff readjustment.
The impact would then cascade. Other smartphone manufacturers, keen to maintain their margins in the face of Apple’s price rise, could also align their prices upwards. This dynamic would affect not only the American market, but also the Old Continent, Asia and all markets where the apple brand often serves as a reference for price positioning in the sector.
In the worst case scenario, consumers around the world could see the cost of premium smartphones increase, regardless of their geographic location.
Apple between a rock and a hard place
During Trump’s first term, Apple narrowly escaped a 15% tax thanks to an extremis trade deal in December 2019. However, other products from the brand, such as the Apple Watch and AirPods, had not benefited from this leniency. This time, the company could see its margins seriously affected.
Faced with these recurring tensions, Apple accelerates its geographic diversification strategy. India is gradually becoming a major production hub for the iPhone, demonstrating a desire to reduce its dependence on China. However, this transition will take time and will not avoid the immediate impact of the new taxes.
This announcement, of course more moderate than the threat of 60% tariffs brandished during the campaign, suggests an approach a little more down-to-earth trade policy. It nevertheless remains extremely worrying for American consumers, and by snowball effect, around the world who could see the price of their phones, tablets or computers increase significantly in the coming months. Under the guise of resolving the most serious American health crisis of this century, Mr. Trump is therefore providing new ammunition to intensify the Sino-American trade war.
- Donald Trump plans an additional customs tax of 10% on products imported from China, justified by the fentanyl crisis.
- Apple and other manufacturers could pass these costs on to consumers, raising the prices of smartphones and technology products globally.
- Apple is accelerating its diversification in India, but this strategy will not be enough to avoid an immediate impact of the new taxes.
