Friday saw an announcement from the US administration of an exemption on small electronics such as phones and laptops, but on Sunday said it was only a short reprieve.
The US markets saw a small rally on Friday after the US administration announced that electronics such as smartphones and laptops, largely produced in China, would be exempt from the 125pc Chinese tariffs and the 10pc tariff on all goods imported to the US.
It remains to be seen what market reactions in the US will be today, after commerce secretary Howard Lutnick told ABC News on Sunday that the administration’s decision to exempt many electronic devices from tariffs was only a temporary reprieve.
“All those products are going to come under semiconductors, and they’re going to have a special focus type of tariff to make sure that those products get reshored,” Lutnick told the This Week programme last night (April 13).
“We need to have semiconductors, we need to have chips and we need to have flat panels – we need to have these things made in America. We can’t be reliant on southeast Asia for all of the things that operate for us.”
He added that these semiconductor tariffs would be coming in “probably a month or two”. It was a warning echoed by Donald Trump on his Truth Social network last night, saying nobody was “getting off the hook” and that the announcement on Friday would just see these tariffs be placed in another “bucket”.
In the meantime, the reprieve saw a rally for stocks such as Nvidia and Apple at the end of the trading day Friday, and analysts are predicting a further rally today. Apple was likely to be hit significantly by these electronics tariffs, with more than half of its sales coming from the iPhone, one third of which are sold in the US, and many of which are manufactured in China.
According to Bloomberg, Apple has already been working on adjusting its supply chain to make more iPhones in India for the US market, where levies would be lower. With its iPhone manufacturing in India set to hit 30m iPhones a year, it would go a long way to cushion it from the massive tariffs on goods manufactured in China.
Apple still faces a dilemma as most of its planned iPhone 17 is to be manufactured in China, and it would be a major task to shift production to India or elsewhere in the space of a few months. The result would be a major hike in iPhone prices in the US, and it is untested whether this is something consumers would swallow there. All eyes will be on the markets today to see the reaction to the somewhat confusing messaging.
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