U.S President Threatens 50% Import Tax on EU Goods and 25% Tariff on Apple Products
The U.S president is considering imposing a 50% import tax on all goods from the European Union and a 25% tariff on all Apple products unless they are manufactured in the United States. These statements were made public on his social media handles on Friday. These threats underscore the president’s capacity to shake the global economy with just a few keystrokes. They also highlight the fact that, so far, his tariff policies haven’t yielded the trade agreements he’d hoped for nor have they enticed manufacturers back to American soil.
The president belongs to the Republican party and he has expressed his desire to impose higher import taxes on products coming from the EU, a traditional ally of the U.S, than on goods arriving from China. China is considered a geopolitical rival but this month had its tariffs reduced to 30% to facilitate talks between Washington and Beijing. The president had shown dissatisfaction with the pace of trade negotiations with the EU.
The EU has proposed a mutual reduction of tariffs to zero. Despite such offers, the president insisted on maintaining a baseline 10% import tax. Before this proposition, he had threatened Apple with increased import taxes due to their decision to continue production of iPhones in Asia. Hence, giant American corporations like Apple, Amazon, and Walmart are caught in a precarious situation as they try and respond to the unstable and inflation-inducing environment triggered by these tariff policies.
The president’s most recent pronouncement sparked interest as he implied that corporations would absorb the tariff fees, conflicting his previous statements. Over the preceding months, as he introduced a series of strict tariffs, he had claimed that foreign countries would finance these import taxes. Generally, importers are responsible for any imposed tariffs, and often these additional costs are transferred to end consumers via escalated prices.
In relation to the tariffs imposed on China, Apple’s CEO, Tim Cook, disclosed earlier this month that most iPhones to be sold in the U.S. in the current fiscal quarter would be shipped from India. Additionally, iPads and other devices will be imported from Vietnam. This move was a response to the tariffs implemented by the U.S President in April.
Following the initiation of the tariffs in April, banking analysts projected that the price of an iPhone, currently $1,200, could increase to a range of $1,500 – $3,500 if manufactured in America. Stocks experiences a decline after the posts made by the president, with the S&P 500 index falling by approximately 1%. The markets have become hypersensitive to the president’s pronouncements, often dipping when high tariffs are declared and rallying when threats of imposing them are withdrawn.
There is an overriding aim to have Apple integrate more of its computer chip supply chain within the U.S. At the heart of the president’s stance against the EU is the ‘totally unacceptable’ trade deficit the U.S. has with the 27 member states. Trade deficits occur when a country imports more than it exports. From the perspective of the EU’s executive commission, trade activities with the U.S. are relatively balanced, taking both goods and services into account.
Being a well-known hub for finance and technology, the U.S enjoys a surplus in services trade with Europe, countering part of the goods trade deficit, reducing the trade imbalance to roughly 48 billion euros, or $54 billion. Johann Wadephul, the German Foreign Minister, stated that his nation fully supports the EU’s executive commission in its efforts to maintain Europe’s access to the American market.
Aides of the president revealed that his tariff policies were aimed at marginalizing China and developing new agreements with allied countries. However, the president’s pattern of tariff threats seems to undermine the rationality behind such claims. It remains to be seen how such geopolitically charged policies will ultimately reshape the global trading landscape.