US President Donald Trump’s administration has exempted smartphones, computers and some other electronic devices from the newly announced tariffs including the heavy 125% levies imposed on Chinese imports. As per US Customs and Border Patrol, these products will be excluded from Trump’s 10% global tariff and also from the higher Chinese import tax. This is considered the first significant reprieve in Trump’s China tariffs.

The move came after tech firms raised concerns about rising gadget prices, as many of them are made in China. Exemptions backdated to 5 April now also include semiconductors, solar cells, and memory cards. Tech analyst Dan Ives called this a “game-changer scenario” and said on X:

“This is the dream scenario for tech investors. Smartphones, chips being excluded is a game-changer scenario when it comes to China tariffs.”

Big tech companies like Apple, Nvidia and Microsoft are relieved. According to Counterpoint Research, as much as 80% of Apple’s iPhones intended for US sale are made in China, with the rest from India. Apple is reportedly increasing production in India after these changes.

Trump Defends High Tariffs but Offers Strategic Exemptions

While traveling to Miami, Trump said he will reveal more soon: “We’ll be very specific,”
he told reporters on Air Force One.

“But we’re taking in a lot of money. As a country we’re taking in a lot of money.”

Trump however continues to stand by his tariff strategy and stated on Friday.

“And I think something positive is going to come out of that.”

White House Press Secretary Karoline Leavitt explained,

“President Trump has made it clear America cannot rely on China to manufacture critical technologies such as semiconductors, chips, smartphones and laptops.” She added, “At the direction of the president, these companies are hustling to onshore their manufacturing in the United States as soon as possible.”

However, White House Deputy Chief of Staff on Policy Stephen Miller Said that

“These electronic goods are still subject to the 20% tariff on China related to fentanyl.”

China’s Tariff Still in Place Amid Broader Trade Push

Trump had initially planned high tariffs on multiple countries to start this week. But on Wednesday, he announced a 90-day pause for most countries except China. China’s tariff was raised to 145%, following its 84% levy on US goods.

In a shift of strategy, Trump said that countries not retaliating would only face a blanket 10% tariff until July. The White House stated the exemptions are part of a negotiating tactic to gain better trade terms. Trump has long argued that his import taxes will address unfairness in the global trading system and that they will bring jobs and factories back to the US.

Relevant Insights and Key Developments

US-China Trade War Background:

The US-China trade war began in 2018, when the Trump administration accused China of unfair trade practices. Since then, both countries have imposed multiple rounds of tariffs, affecting billions of dollars’ worth of goods.

Apple and Samsung Supply Chain Shifts:

Apple has already started assembling iPhone 15 models in India and analysts expect that by 2027, India could produce up to 25% of all iPhones globally. Samsung, on the other hand, has established one of its largest manufacturing plants in Noida, India. This shift to other countries highlights the long-term effect of tariff exemptions on global supply chains.

Semiconductor Manufacturing in the US (CHIPS Act):

The expansion is a result of the CHIPS and Science Act passed in 2022, which allocates $52.7 billion in subsidies to boost U.S. semiconductor manufacturing and research. TSMC’s $100 billion investment will qualify for a 25% manufacturing investment tax credit under this legislation. To reduce national security risks related to imported chips, the U.S. government has been actively promoting the establishment of semiconductor factories by global companies on American soil.

Consumer Impact:

Had these exemptions not been announced, some estimates suggest iPhone prices in the US could have tripled, heavily burdening consumers.