Apple Inc. (AAPL) - Get Report shares fell Tuesday after President Donald Trump suggested that American consumers could "easily" handle an extra 10% tariff on imported iPhones and laptop computers if he were to increase levies on China-made goods next year.
Speaking to The Wall Street Journal, Trump said it was "highly unlikely" that he'll hold off on taking the current level of tariffs applied on China-made imports into the United States to 25% on January 1. He also said that, baring a deal on the sidelines of the G20 summit in Buenos Aires this weekend, he's ready to apply a further round of levies on $267 billion worth of imports, including iPhones and laptops, starting next year.
"Maybe. Maybe. Depends on what the rate is," Trump said in reference to levies on mobile phones and laptops. "I mean, I can make it 10% and people could stand that very easily."
Apple shares fell 1.8% to $171.48 early Tuesday.
Apple CEO Tim Cook addressed the issue of tariffs following the company's fourth quarter earnings on November 1, telling investors that he was "very optimistic and positive that (U.S.-China trade) discussions that are going will be fruitful."
"These relationships, these trade relationships are big and complex, and they clearly do need a level of focus and a level of updating and modernization," Cook said. "And so I'm optimistic that the countries, the U.S. and China and the U.S. and Europe and so forth, can work these things out and work for the benefit of everyone."
Data from the International Trade Center shows that $45 billion worth of mobile phones were imported from China into the United States last year, and Trump himself raised the issue of Apple-focused tariffs back in September.
A recent analysis from IHS Markit estimated that the factory cost of an iPhone 7, which is assembled in China but uses components from various countries including South Korea, Japan and Taiwan, is about $237, a figure that is then used by U.S. customs officials when they are calculating trade activity with China.
However, the U.S. contribution to the construction of an iPhone is around $69, compared to the China-based contribution of around $8.50, meaning tariffs based on the import of an iPhone would hit both U.S. companies and U.S. consumers harder than they would those in China.
Cook himself described the public consultation process for the proposed tariffs on $200 billion in China-made goods "tedious" because, he said, "you not only have to analyze the revenue products, which are a bit more straightforward to analyze, but you also have to analyze the purchases that you're making through other companies that are not related to revenue."