Apple Got Tariff Exemption on Preferential Basis From President Trump, While Others Did Not
Apple got tariff exemptions from Trump administration at a time when other companies like Cisco did not receive any exemptions. Both companies had similar reasons for requesting tariff exemptions but only Apple's request got a positive response.
Applications for Tariff Exemptions
Bloomberg reports that Cisco had requested 25% tariff exemption to import power supplies for its servers and switches that were made in the United States. Cisco had presented a case that these components were not available in the U.S. or in other countries, and were necessary to save American jobs.
Cisco's application said:
The subject power supplies are not strategically important or related to ‘Made in China 2025’ or any other Chinese industrial policy. The manufacture of these products in China is unrelated to China’s efforts to develop indigenous, advanced Information and Communications Technology products.
Cisco's insistence that more than a thousand jobs in the United States were on the line made little difference to its request.
Joseph Barloon, general counsel for the Office of U.S. Trade Representative responded with the following rejection:
After careful consideration, your request was denied because the request concerns a product strategically important or related to ‘Made in China 2025’ or other Chinese industrial programs.
Strangely, Apple's application was worded quite similarly to Cisco's and got an approval, for most components used to make the Mac Pro, including power supply units.
This product is a component of a consumer electronic device. It is not strategically important or related to ‘Made in China 2025’ or other Chinese industrial programs.
Trump and Apple
Bloomberg believes that Apple got a favorable result because Trump was able to declare the opening of a 'major Apple manufacturing plant' in Texas as fulfillment of his campaign promise to bring back jobs to the United States. However, the manufacturing facility was 30 years old and operated by Flex Ltd, a contract manufacturer who has been working with Apple since 2013.
Donald Trump's relation with Apple and its CEO Tim Cook has often been in the news. Whether it is due to a difference in opinions on policies such as DACA (Deferred Action for Childhood Arrivals), or Trump's visit to the Austin, Texas facility used by Apple to manufacture Mac Pro, Cook has carefully maneuvered his way around the U.S. government. While most Apple employees also disagree with the U.S. President's policies and support Democrats, they have been known to support Cook's relationship with Trump as he "tactically keeps him close and at a distance, at the same time", which works well in Apple's favor.
Due to his careful and consistent communications with the Trump administration, Cook was able to lobby for tariff exemptions, something Cisco might need to look into. Apple was given 25% duty relief on 5 components imported from China, while 10 other components were granted tariff waivers.
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