Apple faces new charges after Supreme Court ruling drops old ones [U]

The US Supreme Court 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 ever.

While lobbying Apple has resulted in almost all of its products being excluded from previous tariffs, Trump has announced new ones that will include them as well. Update: Apple has responded – see end of episode.

A quick summary

Last year you saw a tax issue that you couldn’t fix. It started on February 1 when Trump imposed a 10% tariff on all goods from China, additional to certain existing products. This includes a number of Apple products, leaving 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, culminating in a truly unbelievable high of 145%. After lobbying Apple CEO Tim Cook, Trump then released a number of product categories covering all of the company’s products. Negotiations between the US and China subsequently reduced the tariff rate to 10%.

While that seems to be the end of the story from Apple’s perspective, this has now changed.

Supreme Court overturns tariffs

Trump said the International Emergency Economic Powers Act gave him the authority to impose tariffs without Congressional approval. A number of large businesses objected to this and took the matter to court.

On Friday, the US Supreme Court ruled that the law was valid not give Trump the power to impose new taxes and that the tax rates were therefore illegal.

Apple is affected by exchange rates

However, the White House did not give up hope. Just one day after the decision, Trump cited another law that he says gives him the power to impose tariffs. He announced a 10% tariff on all imports from all countries, and later that day said he would raise it to 15%.

Since the latest announcement applies to almost all product categories, it will also apply to Apple products.

9to5Mac’s Take

The problem is unlikely to last forever. Apple will also seek to have its product categories excluded, and businesses may also challenge the legal basis for the new powers Trump is seeking.

Update: It now seems clear that Apple was informed in advance about the tariff plans as the company announced an increase in US production later that same day. We can probably expect to see Trump announce that Apple products are exempt because of this.

However, it will still create unacceptable uncertainty for US companies such as Apple whose products are manufactured overseas. Also, they won’t know their true cost of production until the problem is solved at some unknown date in the future.

Photo: Joe Ravi/CC-BY-SA 3.0