Apple CEO Tim Cook Makes a Strong Case Against China Tariffs—And It’s Not About Trade

Tim Cook

Tim Cook argues that China tariffs will hurt Apple’s already suffering market share. Justin Sullivan/Getty Images

Since the breakout of the U.S.-China trade war last year, Apple CEO Tim Cook has visited the White House more often than any other Big Tech CEOs, as Apple’s designed-in-California, made-in-China electronics sit at the center of the cross fire of tariff battles. Last Friday, Cook reportedly had dinner with President Donald Trump, during which his strong case against imposing new taxes on Chinese imports almost convinced the president.

On Sunday, Trump told reporters that Cook had argued that imposing tariffs on Apple products coming from China would make it difficult for Apple to compete with South Korean rival Samsung.

SEE ALSO: Why Tesla No Longer Needs to Worry About the US-China Trade War

“Tim was talking to me about tariffs and… he made a good case… that Samsung is their number one competitor, and Samsung is not paying tariffs,” Trump said. “I thought he made a very compelling argument, so I’m thinking about it.”

For years, Samsung has consistently owned the largest global market share of smartphones (27% as of 2018). As of last year, Apple was a close second, with third place through sixth all occupied by Chinese brands including Xiaomi, Oppo, Huawei and Vivo.

But by the end of 2018, China’s Huawei had surpassed Apple as the world’s second largest smartphone marker. Apple is still more profitable than Samsung and Huawei, thanks to its (increasingly) heftily priced iPhones, but declining market share is a serious concern to any consumer electronics maker who relies on a loyal customer base to develop new products and services.

Samsung does make some of its phones in China, too. But the majority of its manufacturing happens in Vietnam, India, Indonesia and Korea, whereas Apple has almost its entire assembly line set up in China, making it much more vulnerable to tariffs the U.S. slaps on China.

On August 1, Trump announced plans to impose a 10% tariff on $300 billion of Chinese goods effective September 1. Combined with his previous rounds of tariff hikes on Chinese imports, all $550 billion of annual products China exports to the U.S. would have been covered by then.

But last week, the Trump administration decided to delay the latest tariff hikes on certain consumer goods, including smartphones, laptops and other electronics, until December 15 to mitigate market pains. Taxes on other goods (primarily agriculture and commodity goods) will take effect next month as scheduled.

Apple CEO Tim Cook Makes a Strong Case Against China Tariffs—And It’s Not About Trade