What you need to know
- AirPods, Apple Watch, and HomePod will face 10% tariffs from the Trump administration on September 1.
- The tariffs could potentially make these products more expensive for consumers.
- Analysts believe Apple may absorb the extra cost.
Come September 1, some of Apple's most popular products will be faced with a 10% tariff from the Trump administration—something that will extend across the industry.
As previously announced by President Trump, products including smartwatches, fitness trackers, smart speakers, and Bluetooth headphones will be affected by the tariffs. That list includes the AirPods, Apple Watch, and HomePod.
The silver lining is other tariffs are being delayed until December. The United States Trade Representative released a letter on Tuesday explaining why.
Certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent. Further, as part of USTR's public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles. Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.
According to the USTR's letter, it's conducting an exclusion process for additional products subject to the tariffs. Last year, products such as the AirPods were exempt after manufacturers sent letters to the U.S. government requesting relief.
The AirPods, Apple Watch, and HomePod have become increasingly important to Apple's bottom line as sales of the iPhone decline. In its Q3 2019 earnings report, Apple CEO Tim Cook said when its services, wearables, home, and accessories are combined, they rival the size of a Fortune 50 company.
With Apple expected to introduce new products in September, many consumers are wondering whether the tariffs will be absorbed by Apple or passed on to consumers. Some analysts believe Apple will take the hit in an effort to strengthen its brand image and relationship with suppliers.
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