U.S. duties spare Apple gadgets but hit cloud industry

(Reuters) – The United States will spare Apple Inc’s Watch and other consumer gadgets from the latest round of tariffs on Chinese goods, according to a list of products released by the U.S. Trade Representative (USTR) yesterday.

But parts for the computer servers and networking gear that power “cloud” data centers and internet-based services now face a levy, as do some of the parts for the machines used to make semiconductors.

U.S. President Donald Trump escalated his trade war with China on Monday, imposing 10 percent tariffs on about $200 billion worth of Chinese imports and he warned that if China takes retaliatory action against U.S. farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”

The administration’s proposal drew protest from technology companies earlier this year, but the final list of taxed devices from the USTR avoids many big consumer brand names and products.

The iPhone was not among the ‘wide range’ of products that Apple told regulators would be hit by the $200 billion round of tariffs in a Sept. 5 comment letter to trade officials. Apple feared for its Apple Watch and its wireless AirPods headphones, but both were left off the list announced yesterday.

The new round of tariffs will take effect on Sept. 24 at a 10 percent level and rise to 25 percent on Jan. 1, 2019.

However, if Trump expands the tariffs to an additional $267 billion worth of goods then nearly every Chinese import would be affected, including the iPhone, along with all other smart phones. Apple shares fell 0.7 percent to $216.29 after hours.

Shares of China and Taiwan-based Apple suppliers slipped this morning in Asia. Foxconn, a Taiwan-based manufacturer formally known as Hon Hai Precision Industry Co, fell 2 percent, while assembler Pegatron Corp dropped 2.4 percent. Camera lens-maker Largan Precision Co Ltd slid nearly 9 percent.