![Tweet from Donald J. Trump: "Apple will not be given Tariff [sic] wavers [sic, he means waivers], or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs! [sic]](https://i0.wp.com/leafandcore.com/wp-content/uploads/2019/07/Screenshot_2019-07-26-Donald-Trump-says-the-US-will-not-waive-tariffs-for-Apples-new-Mac-Pro-to-be-made-in-China-9to5Mac.png)
“Wavers” = waivers, and “tariffs” is a proper noun now, apparently.
The 2013 Mac Pro was manufactured in the United States. However, the new Mac Pro will be manufactured in China once again, like nearly all of Apple’s other products. Apple requested an exemption on the tariffs Trump has placed on goods imported from China, as part of his ongoing trade war with the country. Instead, Trump replied with a tweet this morning, dictating policy from an unknown location in the White House from his phone.
The tweet was full of typos, included capitalized “Tariff” and, most humorously, a missing ‘i’ in “waivers.” Wavers, as many know, is a word, but refers to shaking or faltering. A flickering flame wavers in the breeze. I suppose you could also call a group of people waving at something a group of “wavers,” if you had to force it into a noun. We don’t capitalize “tariff” though. Trump often capitalizes words he thinks are important, seemingly misunderstanding English capitalization rules. His phone keyboard may also now autocorrect to the capitalized versions.
Trump’s tweets have been regarded as policy in the past, so, the fact that he deleted and re-tweeted this means that this is the official position of the country’s president, typos aside.
Apple’s Tariff Woes
Apple will not be given Tariff waiver, or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs!
— Donald J. Trump (@realDonaldTrump) July 26, 2019
Tariffs have plagued companies, especially American tech companies, since Trump’s trade war with China began. Apple’s Mac Pro costs $6,000, with configurations expected to go up to $50,000. Apple could have to pay 25% of that per device in tariffs. Apple will offset those prices with high prices passed off on the customer. Ironically, this could lead consumers to go for cheaper, non-U.S. brands, the exact opposite of what Trump claims to want. Apple has not yet announced the complete pricing for the Mac Pro, and therefore could charge more than they would have now that Trump has made his thoughts known via Twitter.
Apple could also move their production back the the United States. However, this may guarantee higher costs for the lifetime of the product. Apple would still ship many components and materials from China, and American wages are higher than Chinese wages. Furthermore, Apple could be betting that Trump’s tariffs will end either through negotiation with China, or by early 2021, when the next president takes office.
Mac Pro Woes
The Mac Pro is likely Apple’s lowest volume machine. Many professionals would rather fill server farms up with Mac Minis for iOS app builds and testing. High pricing discourages average consumers. Even Mac gamers (they exist!) are better suited with a MacBook Pro and an external GPU for gaming at home. The Mac Pro is mostly for serious professionals in the fields of science, animation, video editing, or music composition. These are workhorses, not home computers.
As such, manufacturing them outside of the normal process could be far more expensive than making them in the same facilities that already make other Apple computers. Apple tried to bring manufacturing back to the U.S., but clearly the cost was too high. Now, with a nationalist president driving up costs of producing anything outside of the U.S., Apple could be in a lose-lose situation.
Tariffs? What Tariffs?
Apple’s stock dip was short-lived today, as prices returned to normal after Trump’s edict.
Make no mistake, the American consumer pays for tariffs. The thought is that those consumers will go to other competitors, driving companies to bring their goods back to the United States. But all it has done is lead to higher input tariffs in China, punishing American farmers, and driving Americans to cheaper non-U.S. goods. American businesses and farmers are losing valuable customers all over the world as a result of Trump’s trade war.
Despite this, the stock market has mostly recovered. Investors see tariff woes as temporary setbacks. Even today, Apple’s shares only briefly fell before returning after Trump’s announcement. To put it frankly, investors seem to be betting against Trump and his trade war. This might not go as well if Trump wins reelection, but at least from a stock price standpoint, investors seem to largely ignore the higher costs put on companies from tariffs. It’s a sign that neither they, nor China, take the president very seriously about “Tariffs” and “wavers.” I can’t imagine why.