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Apple's AirPods will not escape Trump's China tariffs

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08/13/2019 | 05:30pm EDT

SAN FRANCISCO/WASHINGTON (Reuters) - Apple Inc AirPods, Apple Watch and HomePod, which have helped the company offset waning sales of its bestselling iPhone this year, are not included in a temporary reprieve on tariffs by the Trump administration and will face a 10% levy on Sept 1.

The administration said on Tuesday that some major items, such as laptops and cellphones, including Apple's MacBooks and iPhones, will not face tariffs until Dec. 15. President Donald Trump said the change was to avoid an impact on U.S. customers during the Christmas shopping season.[nL2N2590HM] The tariff delay that affects some of Apple's biggest-selling products helped send its shares up more than 4% in late trading.

Trump and his administration did not say why some electronics received a reprieve and others did not. Many of the products set to face tariffs on Sept. 1, such as smart watches, fitness trackers, smart speakers and Bluetooth headphones, had been spared once before.

These include popular products from Apple rivals, such as Fitbit smart watches and smart speakers from Amazon.com Inc and Alphabet Inc's Google. The Trump administration had proposed tariffs on those devices to take effect last September, but they were spared at the last moment after Apple, among other companies, told the government that the levies would "result in lower U.S. growth and competitiveness and higher prices for U.S. consumers.”

Some accessories have been central to Apple's efforts to diversify revenue beyond its signature iPhone, which pushed the company's market capitalization past $1 trillion in 2018 though the market cap has slipped this year.

In Apple's latest reported fiscal quarter, the iPhone contributed less than half of company revenues for the first time in seven years. The iPhone's decline was somewhat offset by a 50% jump in sales of so-called wearables, such as the Apple Watch and AirPods, helping Apple beat Wall Street estimates and boosting its stock.

Apple does not break out by geographic region the sales of products such as wearables.

"We've really put large strategic investments and resources and interest into wearables and services," Apple CEO Tim Cook told Reuters on July 30. "And if you take those two and add them together, they're now the size of a Fortune 50 company, and they were essentially nascent businesses not that long ago."

Apple, Fitbit, Amazon and Google did not immediately return requests for comment.

(Reporting by David Lawder in Washington and Stephen Nellis in San Francisco; Editing by Richard Chang and Leslie Adler)

By Stephen Nellis and David Lawder

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM -0.98% 1805.6 Delayed Quote.21.41%
APPLE -0.08% 212.46 Delayed Quote.34.80%
FITBIT INC 3.97% 3.14 Delayed Quote.-39.24%
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