Trump's commerce secretary says new electronics tariff exemptions temporary, chip tariffs coming

Nashville, Apr 13(AP) Tariff exemptions announced Friday on electronics like smartphones and laptops are only a temporary reprieve until the Trump administration develops a new tariff approach specific to the semiconductor industry, US Commerce Secretary Howard Lutnick said Sunday.

“They're exempt from the reciprocal tariffs but they're included in the semiconductor tariffs, which are coming in probably a month or two,” Lutnick told ABC's “This Week” on Sunday.

The Trump administration late Friday said it would exclude electronics from reciprocal tariffs, a move that could help keep the prices down for popular consumer devices that aren't usually made in the US.

The move was expected to benefit big tech companies like Apple and Samsung and chip makers like Nvidia, though the uncertainty of future tariffs may rein in an expected tech stock rally on Monday.

US Customs and Border Protection said items like smartphones, laptops, hard drives, flat-panel monitors and some chips would qualify for the exemption. Machines used to make semiconductors are excluded too. That means they won't be subject to the current 145 per cent tariffs levied on China or the 10 per cent baseline tariffs elsewhere.

It's the latest tariff change by the Trump administration, which has made several U-turns in its massive plan to put tariffs in place on goods from most countries. Lutnick's comments Sunday made clear that more changes were on the way, including a policy specific to the computer chip industry.

On Air Force One Saturday night, President Donald Trump told reporters he would get into more specifics on exemptions on Monday. “We've been making a lot of money,” he said. "It's been the other way around. Other countries, in particular China was making a lot of money.” The exemption filed Friday night seemed to reflect the president's realization that his China tariffs are unlikely to shift more manufacturing of smartphones, computers and other gadgets to the US any time soon, if ever, despite the administration's predictions that the trade war prod Apple to make iPhones in the US for the first time.

But that was an unlikely scenario after Apple spent decades building up a finely calibrated supply chain in China. What's more, it would take several years and cost billions of dollars to build new plants in the US, and then confront Apple with economic forces that could triple the price of an iPhone, threatening to torpedo sales of its marquee product.

Trump's decision to exempt the iPhone and other popular electronics made in China mirrors the similar relief that he gave those products during the trade war of his first term in the White House. But Trump began his second term seemingly determined to impose the tariffs more broadly.

The turmoil battered the stocks of tech's “Magnificent Seven” -- Apple, Microsoft, Nvidia, Amazon, Tesla, Google parent Alphabet and Facebook parent Meta Platforms.

At one point, the Magnificent Seven's combined market value had plunged by USD 2.1 trillion, or 14 per cent, from April 2 when Trump unveiled sweeping tariffs on a wide range of countries. When Trump paused the tariffs outside of China on Wednesday, the lost value in those companies was pared to USD 644 billion, or a 4 per cent decline.

The electronics exemption is the kind of friendly treatment that industry was envisioning when Apple CEO Tim Cook, Tesla CEO Elon Musk, Google CEO Sundar Pichai, Facebook founder Mark Zuckerberg and Amazon founder Jeff Bezos assembled behind the president during his January 20 inauguration.

That united display of fealty reflected Big Tech's hopes that Trump would be more accommodating than President Joe Biden's administration.

Apple won praise from Trump in late February when the Cupertino, California, company committed to invest USD 500 billion and add 20,000 jobs in the US during the next four years. The pledge was an echo of a USD 350 billion investment commitment in the US that Apple made during Trump's first term when the iPhone was exempted from China tariffs.

The move removes “a huge black cloud overhang for now over the tech sector and the pressure facing US Big Tech,” said Wedbush analyst Dan Ives in a research note. Ives amended that note after Lutnick's comments Sunday, saying the confusing news out of the White House “is dizzying for the industry and investors and creating massive uncertainty and chaos for companies trying to plan their supply chain, inventory, and demand.” In a statement issued Saturday, White House Press Secretary Karoline Leavitt did not address the exemptions specifically but indicated the administration still plans to push for tech companies to move manufacturing to the US.

She said the administration has secured US investments from tech companies — including Apple, TSMC and Nvidia — who are "hustling to onshore their manufacturing in the United States as soon as possible.” Neither Apple nor Samsung responded to a request for comment over the weekend. Nvidia declined to comment. (AP) GRS GRS

Source: PTI