BBC reported today (April 14) that "the United States has removed the largest commodity China exports - and undoubtedly one of the most eye-catching finished products - from the list of goods subject to additional tariffs, and initially did not publicly announce this news."

In a U.S. Customs notice quietly released early Saturday morning, a series of goods were listed as being exempt from the 125% tariff.

To most people, the code "8517.13.00.00" may not mean much, but on the U.S. Customs list, it represents smartphones.

This means that last year's highest-valued export from China to the United States was exempted from import duties, while other electronic devices and components, including semiconductors, solar cells, and memory cards, were also exempted. According to Capital Economics, nearly a quarter of China's total exports to the U.S. are now exempt from the 125% tariff.

In the context of U.S. Commerce Secretary Howard Lutnick announcing days ago that tariffs on China would be raised to bring Apple phone production back to the U.S., this is a shocking turnaround.

According to data from the global technology market research firm Counterpoint, up to 80% of the iPhones produced for the U.S. market are manufactured in China, with profit margins estimated at between 40-60%.

What if this exemption had not been granted? The price of the iPhone might have approached $2000 instead of $1000.

U.S. media reported over the weekend that White House trade hawk Peter Navarro is also being marginalized, with Treasury Secretary Scott Beasant taking his place.

Comment:

The U.S. exemption of tariffs on smartphones and other electronic products this time is a "180-degree turn" in its tariff policy. Previously, U.S. Commerce Secretary announced that tariffs on China would be increased to encourage Apple phone production to return to the U.S., but now they have suddenly been exempted, which is completely different from the previous grand announcement of "reciprocal tariffs," highlighting the capriciousness and chaotic nature of its tariff policy.

The pressure from U.S. tech companies is a key factor. Most of the products of tech giants like Apple are manufactured in China. If high tariffs are imposed on these products, companies will face enormous cost pressures, which could even trigger industry turmoil, leading to a significant increase in electronic product prices and placing a heavy burden on consumers. At the same time, changes in power within the White House, with trade hawks being marginalized, also prompted the adjustment of policies.

73% of smartphones and 78% of laptops in the U.S. are manufactured in China, and China holds an important position in the global electronics industry supply chain. The U.S.'s high dependence on Chinese electronics makes it difficult to bear the consequences of imposing additional tariffs, forcing it to acknowledge the reality of the global supply chain and grant tariff exemptions for related products.

This exemption involves nearly a quarter of China's total exports to the U.S., marking the first signal of some easing in U.S. tariffs against China, possibly indicating a partial de-escalation of the tariff war. However, given the U.S. government's capricious tariff policy and its long-term goal of containing China, future tariff policies remain uncertain, and there is no guarantee that new tariff measures will not be implemented for relevant industries.

The exemptions granted by the Trump administration have temporarily alleviated the pressure on the U.S. tech industry in the short term, but in the long run, the U.S. is attempting to guide the industrial chain "away from China" through exemption policies, such as encouraging Apple to shift capacity to India and Vietnam.

Source: https://www.toutiao.com/article/1829362098570308/

Disclaimer: This article solely represents the author's views.