The US Supreme Court has declared on Friday that most of the import tariffs imposed by the Trump administration last year were illegal. Trump’s response to this now leaves Apple in a worse position than it was in before.
While lobbying by Apple had resulted in almost all of its products being excluded from the previous tariffs, Trump has announced new ones which will include them again …
A quick recap
Last year saw a tariff story you really couldn’t have made up. It began on February 1 when Trump imposed blanket 10% tariffs on all goods imported from China, that were additional to the product-specific ones already in place. This included the bulk of Apple’s products, leaving either the company or its customers facing billions of dollars a year in additional costs.
Over the next two months, we saw a rapid escalation of tit-for-tat tariffs between the US and China, ending in a truly unbelievable peak rate of 145%. After lobbying by Apple CEO Tim Cook, Trump then exempted a number of product categories covering all of the company’s products. Negotiations between the US and China subsequently saw the additional tariff rate reduced to 10%.
While that appeared to be the end of the story from an Apple perspective, this has now changed.
Supreme Court strikes down tariffs
Trump had claimed that the International Emergency Economic Powers Act gave him the authority to impose tariffs without congressional approval. A number of large businesses challenged this and took the matter to court.
On Friday, the U.S. Supreme Court ruled that this law did not give Trump the power to levy new taxes and that the tariffs were therefore illegal.
Apple affected by replacement tariffs
However, the White House hasn’t given up. Just one day after the ruling, Trump cited an alternative law claiming that this one gives him the power to impose tariffs. He announced a blanket 10% tariff on all imports from all countries, and later the same day said that he would be increasing these to 15%.
Since the latest proclamation applies to almost all product categories, it will once again apply to Apple products.
9to5Mac’s Take
The issue is unlikely to be a permanent one. Apple will once again lobby for its product categories to be excluded, and businesses are again likely to challenge the legal basis for Trump’s claimed new powers.
However, it will still create unwelcome uncertainty for US companies like Apple who have their products manufactured overseas. Once more, they won’t know their true manufacturing costs until the issue is resolved at some unknown future date.
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