Apple denied tariff exemption as trade talks set to resume
October 8, 2019 Category Foreign trade, Weekly
Apple was denied tariffs relief on five Chinese-made components for the upcoming Mac Pro computer, even after the company announced it was keeping some assembly operations in the U.S. The U.S. Trade Representative’s office refused to grant reprieve from 25% tariffs on optional wheels for Apple’s Mac Pro, a circuit board for managing input and output ports, the power adapter, charging cable and a cooling system for the computer’s processor. The decision came about a week after Apple announced it would make new Mac Pro computers in Austin, Texas, after originally considering shifting production to China.
The move followed an announcement this month that the USTR had agreed to Apple’s request for tariff waivers on 10 of 15 Chinese parts. Apple was denied tariff relief even as President Donald Trump praised the company’s decision to keep some production activities in Texas, thereby supporting U.S. jobs. Apple said it didn’t have any further comment. 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. Products such as the Apple Watch, AirPods and iMac computers were hit by 15% tariffs earlier this month, while the iPhone, iPad and other major Apple products are set to be impacted later in December.
Meanwhile U.S. President Trump called on Beijing to launch an investigation into the activities of Hunter Biden, the son of his Democratic rival for the presidency Joe Biden. However, China is unlikely to breach its long-standing principle of not interfering in the internal affairs of other countries. Trump also asked Ukraine to investigate Biden and is facing possible impeachment as a result. This may overshadow the upcoming trade talks which are to be held between Chinese and American negotiators in Washington this week. Trump accused Hunter Biden of accepting “billions of dollars in “pay-offs” from Beijing and favorable treatment for his son’s business interests in exchange for softer trade policies. Hunter Biden is Director of BHR Equity Investment Fund Management, which is incorporated in Beijing, but public records do not support Trump’s claims that Beijing invested USD1.5 billion in it. According to the New York Times, Hunter Biden bought a 10% stake in BHR in October 2017 – when his father was no longer Vice President – for about USD420,000.
Christopher McNally, Professor of Political Economy at Chaminade University in Hawaii, said that the negotiations were likely to achieve some breakthroughs given the slowdown of the U.S. economy and the political pressures on Trump. He said possible outcomes included a “ceasefire” in the tariff dispute; “mini deals” on market access, intellectual property rights or the U.S.’ restrictions on Huawei; and China agreeing to buy more American agricultural products.
Indonesia is the “only loser” among ASEAN countries for failing to attract manufacturers seeking to bypass higher tariffs from the U.S.-China trade war, according to two economists from brokerage firm Maybank Kim Eng in Singapore. Vietnam, Malaysia, Singapore and the Philippines had picked up business – mostly in the form of higher foreign direct investment (FDI). Economist Lee Ju Ye said Vietnam had emerged as the biggest beneficiary, with a 73% jump in FDI inflows from China and Hong Kong last year.
As manufacturing data from China, the United States and Europe weakened to record levels in September, economists argued that a downward trend could be expected to continue until at least the first quarter of 2020 amid the trade war between China and the U.S. China’s manufacturing activity has now contracted for five consecutive months, while readings for both Germany and the U.S. dropped to their lowest levels in a decade, the South China Morning Post reports.
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