Daily Management Review

U.S. Tariffs Could Hard Hit Apple Watch, Fitbit, Etc.


07/22/2018




U.S. Tariffs Could Hard Hit Apple Watch, Fitbit, Etc.
According to government ruling on tariffs, the Apple Watch, health trackers, streaming music speakers and other accessories that are assembled in China could be hit because the latest round of U.S. tariffs on $200 billion worth of Chinese goods.
 
Connected speakers from Sonos Inc., several activity trackers from Fitbit Inc and Apple watches have been named in the rulings. While there is little danger so far from such hits for the largest sellers of the consumer technology products like mobile phones and laptops, it is unlikely that makers of electronic gadgets would spread altogether according to rulings and such makers might need to resort to hiking of prices for products that are regularly used by millions of consumers.
 
In the sprawling list of U.S. tariff codes, the obscure subheading of data transmission machines, as decided by the U.S. Customs and Border Patrol officials, is where all of such products and devices have been placed. And the list of the over 6,000 such codes that have been decided to be tariffed by United States President Donald Trump in his most recent round of proposed tariffs released earlier this month contains that subheading.
 
That $200 billion list of tariffs is in a public comment period. Up to 10 per cent tariffs could be faced by the products from Apple, Fitbit and Sonos if the list goes into effect this fall.
 
The original Apple Watch; Fitbit’s Charge, Charge HR and Surge models; and Sonos’s Play:3, Play:5 and SUB speakers are the specific products that find their place in the customs rulings.
 
There were no comments from any of the three companies. However, Sonos said that “the imposition of tariffs and other trade barriers, as well as retaliatory trade measures, could require us to raise the prices of our products and harm our sales” in the documents it submitted for filing earlier this month to become a publicly traded company.
 
There was a report published in The New York Times, citing source information, about that Trump assuring Apple CEO Tim Cook at a meeting in May that the company’s iPhones that are assembled in China would not be taxed by the U.S. government.
 
“The way the president has been using his trade authority, you have direct examples of him using his authority to target specific products and companies,” said Sage Chandler, vice president for international trade policy at the Consumer Technology Association.
 
There could be significant hit for the smaller products in the gadget world because of the tariffs.  Collectively, Sonos and Fitbit, generated revenues of $2.6 billion last year even though the companies do not give break up of sale of individual products. The Apple Watch alone will bring in $9.9 billion in sales this year. estimates Bernstein analyst Toni Sacconaghi. That estimate however also includes sale predictions for the watch in markets outside of the US where the tariffs would have no impact at all.
 
(Source:www.reuters.com)






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