Washington: US President Donald Trump has praised Apple CEO Tim Cook for “making a good case” that tariffs on China will help Samsung gain more as it is based in South Korea and does not need to pay any tariffs.
In a conversation with reporters, Trump said “he has had a very good meeting with Cook”, The Verge reported on Sunday.
“I have a lot of respect for Tim Cook, and Tim was talking to me about tariffs. And one of the things, and he made a good case, is that Samsung is their number-one competitor, and Samsung is not paying tariffs because they’re based in South Korea,” Trump told the media at a New Jersey airport.
Most of Apple’s products are assembled in China and will be subject to an additional 10 per cent import tax later this year.
The ongoing trade war between the US and China has caused Apple’s iPhone production costs to rise as much as 3 percent because of the new retaliatory tariffs imposed by Beijing, to come into effect from September 1 for products like the Apple Watch and AirPod.
Trump met Cook during a dinner on Friday night, saying that Apple would be spending “vast sums of money in the US”.
“It’s tough for Apple to pay tariffs if they’re competing with a very good company that’s not. I said, a How good a competitor?’ He said they are a very good competitor. So Samsung is not paying tariffs because they’re based in a different location,” said Trump.
Samsung has most of its manufacturing base in South Korea and Vietnam.
Apple iPhones would be around $100 more expensive in the US once new 10 percent tariff on $300 billion in goods imported from China comes into place from September 1.
“iPhone sales in the US, China, and other markets could fall by 8 million to 10 million,” CBS News reported earlier this month.
Apple XS Max starts at $1,099 and new 10 percent tariff would mean a roughly $110 hike.
In May, Fortune quoted a Wedbush analyst Dan Ives as telling investors that tariffs on the device’s Chinese-made batteries and other components would increase Apple’s manufacturing cost by 2 to 3 percent.
According to Ives, Apple’s costs could soar higher if the Trump administration follows through with a plan to add an additional $325 billion in tariffs to Chinese goods. If that happens, iPhones would cost an extra $120 each to produce.