Apple Is Denied Tariff Relief on Five Mac Pro Parts After Staying in Texas

The US trade representative's office denied Apple's request for relief from 25 percent tariffs on the optional wheels for the Mac Pro.

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Apple Is Denied Tariff Relief on Five Mac Pro Parts After Staying in Texas
Highlights
  • USTR's office denied Apple's request for relief from 25 percent tariffs
  • USTR had earlier agreed to request for waivers on 10 of 15 Chinese parts
  • Apple had announced it was keeping some assembly operations in the US

Apple won't be exempted from tariffs on five Chinese-made components for the upcoming Mac Pro computer, even after the company announced it was keeping some assembly operations in the US.

The US trade representative's office denied Apple's request for relief from 25 percent tariffs on the much-discussed optional wheels for Apple's Mac Pro, a circuit board for managing input and output ports, a power adapter, a charging cable and a cooling system for the computer's processor.

The decisions, posted Monday, come about a week after Apple announced it would make new Mac Pro computers at a plant in Austin, Texas - which it's operated since 2013 - after originally considering shifting production to China like its other products. The move followed an announcement this month that the US trade office had agreed to Apple's request for tariff waivers on 10 of 15 Chinese parts.

President Donald Trump on Monday linked on his Twitter account to a Fox Business story about Apple's plans in Texas and praised the company for supporting US jobs.

"Great news! @Apple announced that it is building its new Mac Pro in Texas. This means hundreds of American jobs in Austin and for suppliers across the Country. Congratulations to the Apple team and their workers!" the president tweeted Monday.

Apple said it didn't have any comment beyond last week's announcement.

Exclusion decisions are based on whether a product is available only from China, is strategically important or related to Chinese industrial programs, and whether duties will "cause severe economic harm" to the company or US interests.

In letters to Apple posted online, the trade representative's office said the five exclusion requests were denied because they "failed to show that the imposition of additional duties on the particular product would cause severe economic harm to you or other US interests."

In announcing that the Mac Pro would continue to be made in Texas, Apple applauded the Trump administration for its tariff relief on the other components, including the computer's casing and accessories like the mouse and trackpad. The starting price for the Mac Pro is $5,999, and the optional wheels are expected to be an extra cost.

In its 15 requests for exclusions posted July 18, Apple said that the devices or components are not related to Chinese industrial programs - and that "there are no other sources for this proprietary, Apple-designed component."

Trump had signaled that relief from tariffs would be rejected, saying in a July 26 tweet that "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!" But the president later told reporters that "we'll work it out" and that "I think they're going to announce they're going to build a plant in Texas."

Apple's requests involved goods that are part of $200 billion in Chinese products hit with tariffs in September 2018. Trump increased the duty on that batch to 25 percent from 10 percent in May. The rate is due to rise to 30 percent on Oct. 15, including on another $50 billion of goods also hit last year.

Products such as the Apple Watch, AirPods, and iMac computers were hit by 15 percent tariffs earlier this month, while the iPhone, iPad and other major Apple products are set to be impacted later in December. Apple has maintained that its products are primarily designed in the US and has grown its local investment since the trade war began brewing.

© 2019 Bloomberg LP

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