Retailers prepared for rising prices across the board in the US as a new tariff against Chinese exports came into force on Sunday September 1.
Apple is expected to take a hit of as much as $1 billion (£820 million) from President Trump’s new tariffs, which puts a 15 per cent charge on $125 billion (£102 billion) of Chinese imports from midnight on September 1.
It is the first time any of Apple’s major products will be affected by US tariffs, and comes ahead of further duties on smartphones and laptops scheduled for December.
With the tariffs entered into the Federal Register on Friday August 30, Apple Watch and Watch bands, AirPods, IMac computers and some Beats headphones will now be hit by the charges.
Analysts are still unclear as to how the tariffs will be applied, although Daniel Ives, an analyst at Wedbush Securities speaking to the Telegraph, estimates that Sunday’s tariffs could ultimately cost Apple between 1 per cent and 2 per cent of its profits, equivalent to between $500 million (£411 million) and $1 billion (£820 million) a year.
Speaking in August before the tariff went ahead, The National Retail Federation (NRF), which includes Amazon and Walmart as members, criticised Trump’s threat to impose the tariffs, arguing they would further raise prices for consumers.
Alongside the Retail Industry Leaders Association (RILA), the Footwear Distributors and Retailers of America and the American Apparel & Footwear Association, the NRF has accused Trump of “using American families as a hostage in his trade war negotiations”.
It’s not yet known if Apple will raise product prices or absorb the costs of the tariffs.
Meanwhile, although US clothing retailers thought they would be able to order in stock for the holidays before the second tariff date of December 15, 91.6 per cent of Chinese apparel imports will still be hit with a 15 per cent tariff beginning Sept. 1, according to new data breakdowns from the American Apparel and Footwear Association.
The group also said 68.4 per cent of home textiles and 52.5 per cent of footwear will also begin to see tariffs on September 1. The remaining imports in these categories will be levied 15 per cent on December 15.
Best Buy, Macy’s and Home Depot are now thought to be implementing strategies to reduce the impact of the tariffs, including moving factories, suppliers or vendors out of China.