Donald Trump has exempted high tariffs on smartphones from China in a move that continues to diminish his key trade policy.
This move was quietly announced by the U.S. Customs and Border Protection Agency on Friday night. It extends to other consumer electronics including flat-screen TVs along with computers and camera accessories.
This event occurs as American consumers rush to stores to avoid a significant price increase that will take effect next week.
This sudden change means that popular electronic items will not face the 125% tariff on Chinese goods as well as the 10% tariff applied to most other countries.
The tariff delay appears not to apply to Trump's separate tariff on China – a 20 percent tariff imposed to pressure Beijing to crack down on fentanyl, including the shipment of precursor materials.
It is estimated that the U.S. accounts for more than half of Apple's global iPhone sales.
In recent days, China is reported to have ramped up production in India as well as shipped a batch of iPhones to the U.S. before implementing the planned import tariff, and consumers have rushed to stores hoping to avoid a large price increase.
According to the latest data, the U.S. spent $60.3 billion (£46 billion) on imported mobile phones in 2023.
Apple produces 80 percent of its phones in China and the rest in India. Samsung has stopped producing phones in China, shifting production to Vietnam and India.
Computers account for 15.8 percent of the total import volume of the United States, with most production occurring in China, Taiwan, India, and Brazil.
The same goes for flat-screen TVs, which are primarily produced in China, Mexico, and Vietnam.
Friday's reversal closed a 10-day volatility period regarding tariffs, starting from April 2, which Trump hailed as "Liberation Day." His announcement of high "reciprocal" tariffs caused a stock market crash with stocks plummeting, and the Dow-Jones dropped over 1,000 points.
Then, on Wednesday, after the market turmoil, the U.S. president postponed the implementation of tariffs for 90 days, saying that people are "a bit anxious, a bit scared," and also acknowledged that the bond market is "nervous."
Business experts were astonished by the events of the week. Neil Sanders, a retail analyst at Global Data, told The Telegraph that the administration is "implementing policy hastily."
"It's a tangled web; policies change daily. Tariffs are imposed, and then there's a significant backlash, and when they see that this taxation will destroy the industry.
"This is really not beneficial for any company trying to do business."
On Saturday, questions were raised about whether anyone was informed in advance about the exemptions.
Edward Alden, a senior trade expert from the U.S. at the Council on Foreign Relations, said: "I increasingly think that the trade war is just a ruse by Trump and his wealthy friends. Apple's stocks rose 4 percent [on] Friday. Someone knew this was about to happen."
Last week, the White House dismissed accusations from Democrats that Trump had informed allies he was about to suspend his tariff round, leaving only the higher 10 percent tariffs on China.
In response to the smartphone tariff exemption, Douglas Boneparth, founder of an asset management company, said: "We're going to tax China on everything except 99 percent of the stuff we import!"
'Are we getting anything back?'
Joe Weisenthal, a Bloomberg analyst, added: "Since the initial tariff announcement, stocks are down, bonds are down, the dollar is down, and consumer confidence has dropped significantly. And there have now been two notable pullbacks. What have we gotten in return?"
However, White House Press Secretary Karoline Leavitt defended the administration's tariff policy and the policy shift towards China, saying: "President Trump has made it clear that America cannot rely on China to produce critical technologies such as semiconductors, chips, smartphones, and laptops.
"That’s why the president has secured trillions of dollars in investment from the largest tech companies in the world, including Apple, TSMC, and Nvidia. Under the president's direction, these companies are working to bring their manufacturing operations to the U.S. as soon as possible."
Economists warn that disruptions in trade between the closely linked U.S. and Chinese economies will raise prices for consumers and could lead to a global recession.
Chinese Commerce Minister Wang Wentao told the head of the World Trade Organization (WTO) that U.S. tariffs would "cause serious damage" to poor countries, according to a statement from the ministry released on Saturday.
Beijing also hinted on Friday that it would disregard any further tariffs from Trump as they believe that it is no longer economically viable for importers to purchase goods from the U.S.
China also stated that it would file a complaint with the WTO regarding the latest round of tariffs.
Meanwhile, the Taiwanese government said on Saturday that it had its first discussion on tariffs with the U.S. and expects more negotiations to build a "strong and stable" trade relationship.
Taiwan President Lai Ching-te said on Friday that the island is on "the initial negotiation list of the U.S. government" as he seeks to protect his exporters from a 32 percent tariff.
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