Apple Will Pay 25% Tax on 5 Imported Mac Pro Components

[jiyeon]

Source: The Verge

 

Apple has been denied exclusions on five parts for the Mac Pro which will lead to the components in question subject to a 25% import tax.

 

Quote

The US Trade Representative’s office has denied Apple tariff relief on five parts for its new Mac Pro computer, as reported by Bloomberg. Each of the imported parts — the optional wheels, a circuit board for managing input and output ports, power adapter, charging cable, and a cooling system for the processor — are now likely to be subject to the proposed 25 percent tariff on goods imported from China.

Quote

The news comes on the heels of Apple announcing it would switch the manufacturing of the new Mac Pros from China to its Austin, Texas, facility, where the company has been assembling the prior-generation Mac Pros since 2013. The denial is also happening on the same day Trump took to Twitter to applaud the company’s decision to make the computer domestically.

 

It might not be all doom and gloom for Apple though, as the company says a US manufacturing might be worthwhile due to the value of the new Mac Pro, and the migration of manufacturing of the new Mac Pro to Austin, TX.

 

Quote

When Apple decided to switch manufacturing from China back to its existing US facility, the company said in a press release that the change was possible due to a “federal product exclusion” on “certain necessary components.” The company says that the value of its American-made components in the new Mac Pro is 2.5x more valuable than the previous generation, and so a tariff exclusion could save Apple enough money to make US assembly worthwhile.

 

This confirmation follows in the footsteps of the ongoing trade war between USA - or just Donald Trump for that matter - and China, in which Trump has a firm foot in the ground to disable American companies from importing from China.

 

Quote

The Trump administration has been proposing tariffs as high as 25 percent on computers as part of an ongoing trade battle with China. In July, Trump tweeted that Apple would not receive an exemption for Mac Pro parts, saying, “Make them in the USA, no Tariffs!” The tech industry as a whole, including Microsoft, Intel, and Nintendo, have pushed back on the tariffs. In a June filing, Apple said the added fees “would result in a reduction of Apple’s US economic contribution” and “tilt the playing field in favor of our global competitors.”

 

25% import tax sounds like it'll bite the multi-billion dollar Apple, the question remains on how this will affect Mac Pro manufacturing, sales, as well as profit for them. It doesn't help Apple - or by extension any American company - that Trump is so adamant to stop China trade, Tim Cook has previously spoken out about the trade war and how much it might hurt the company.

It will also be interesting to see how Apple does with its manufacturing now that they have moved manufacturing from China to Austin, TX. Plenty of changes and plenty of improvisation and adaptation to be done by Apple in particular.

[DrMacintosh]

Apple has a plant in Texas. I thought I heard that they were going to bring production of the Mac Pro to that plant. 

 

That being said, the Mac Pro is DoA. AMD Killed it with their EPYC chips. Even the high end Xeon in the Mac Pro is garbo in comparison. In addition to that Navi has come out and all the work put into the Vega Pro II Duo seems to have been for nothing. 

[Kisai]

Quote

the optional wheels, a circuit board for managing input and output ports, power adapter, charging cable, and a cooling system for the processor

Well, the wheels probably should have been standard furniture/luggage casters, but that's not even a $10 cost to Apple in all likeliness and they could eat the cost if people order it as most likely won't need it. The PCB for the IO, and the Cooler are likely required parts they engineered and but likely aren't the pricey parts either. 

 

I'm wondering about "power adapter and charging cable" though, since the Mac Pro doesn't have a "power adapter".

 

 

You see the NEMA 5-15 right on the bottom.

[FezBoy]

4 minutes ago, Kisai said:

I'm wondering about "power adapter and charging cable" though, since the Mac Pro doesn't have a "power adapter".

You see the NEMA 5-15 right on the bottom.

This confused me too.  Maybe they meant the actual psu and NEMA 5-15 cable?

 

These are all basic machined parts, and should be easy to source from the U.S.  As long as they don't start throwing tariffs on silicon I think it'll be fine.

[dizmo]

I don't imagine cables and wheels are going to be hard for them to source in country, or to make themselves.

I also don't think that it's going to hurt their bottom line that much at all. Those are very small line items they're getting taxed 25% on.

 

You say it'll bite them...haha, no, no it really won't.

[suicidalfranco]

5 hours ago, DrMacintosh said:

Apple has a plant in Texas. I thought I heard that they were going to bring production of the Mac Pro to that plant. 

 

That being said, the Mac Pro is DoA. AMD Killed it with their EPYC chips. Even the high end Xeon in the Mac Pro is garbo in comparison. In addition to that Navi has come out and all the work put into the Vega Pro II Duo seems to have been for nothing. 

Who are you and what have you done to the real @DrMacintosh

[yolosnail]

So that's like $3 they'll have to pay then...

[Eaglerino]

glad to see there's no exemptions. it seems too often our government makes rules but then a company asks nicely and they get out for free. Apple may as well be a Chinese company at this point, they should leave the US or bring all their manufacturing back to the US along with any other US company that sold out to China

[GoldenLag]

9 hours ago, DrMacintosh said:

In addition to that Navi has come out and all the work put into the Vega Pro II Duo seems to have been for nothing. 

Navi really doesnt work for compute, so the choice of Vega makes sense. 

[Deli]

3 hours ago, Eaglerino said:

glad to see there's no exemptions. it seems too often our government makes rules but then a company asks nicely and they get out for free. Apple may as well be a Chinese company at this point, they should leave the US or bring all their manufacturing back to the US along with any other US company that sold out to China

First Apple must pay their fair share of taxes.

[Donut417]

11 hours ago, sowon said:

It doesn't help Apple - or by extension any American company - that Trump is so adamant to stop China trade

Its not about helping the compnaies. Its about forcing them to provide more Jobs in the US and to bring back manufacturing. The issue here is thats not going to work. Manufacturing in the US is pretty much dead at this point. Not enough people to fill sklled trades posisions. 

 

The company I work for is being affected by this as well. Some of the items they were able to find suppliers in other countries not affected. But some items they had to raise prices on. The good news is that we are the only or one of the few companies that do what we do. So we dont have to worry about competion.

[DrMacintosh]

5 hours ago, GoldenLag said:

Navi really doesnt work for compute, so the choice of Vega makes sense. 

True, Navi isn’t as good at compute as Vega, but Navi is more efficient and cost less across the board. 
 

Right now Vega just seems to be in limbo. Navi has replaced it for consumers and Vega is only really being used in the “Pro” space in limited compute capacity. The lineup seems a little hazy from Radeon imo. 

[spartaman64]

On 9/30/2019 at 7:04 PM, DrMacintosh said:

Apple has a plant in Texas. I thought I heard that they were going to bring production of the Mac Pro to that plant. 

 

That being said, the Mac Pro is DoA. AMD Killed it with their EPYC chips. Even the high end Xeon in the Mac Pro is garbo in comparison. In addition to that Navi has come out and all the work put into the Vega Pro II Duo seems to have been for nothing. 

by production they probably mean they are going to put the feet on at that plant

[melete]

And here I thought China was paying for the tariffs.

[Donut417]

1 hour ago, melete said:

China was paying for the tariffs.

Not how it works. Companies who order the good, are the ones charged for the tarrif. So by that statement it means us the consumers are charged, because they will just roll it in to the price. Thats what the company I work for did. Some of the items they found other countries outside the tarffis to get the items from, while others are still coming from China. Customers were emailed with the changes in pricing. 

[Guest]

US Manufacturing! Great work Tim Apple

[Kilrah]

10 hours ago, Donut417 said:

Not how it works. Companies who order the good, are the ones charged for the tarrif. 

Yes, but what he means is that some Chinese sellers have lowered their prices to offset the tariffs in order to keep their business, short-circuiting the whole thing.

[Donut417]

3 hours ago, floofer said:

US Manufacturing! Great work Tim Apple

Doesnt exist. Its a myth. My dad is a machinst. He and his coworkers are a dying breed. Also Apple is not manufacutring in the US, they are "Assembling", there is a diffrence. Manufacturing would mean making parts here in the US. 

 

People who think we can bring back manufaucuring to the US, are somking some of the good stuff. Because we dont have the skill sets anymore to get it done. 10 years ago in the news paper my dad read that the average age of a tool and die maker is 50 years old. Some can retire as early as 62, or some have to wait till like 65. So a majority of those in the feild are about to leave it. The previous generation told my generation that we needed to get a degree and not do skilled trades. So there is no one to take those jobs. Michigan has shit loads of skilled trades jobs open, but no one qualified to fill them. 

[Commodus]

On 10/1/2019 at 3:56 AM, Eaglerino said:

glad to see there's no exemptions. it seems too often our government makes rules but then a company asks nicely and they get out for free. Apple may as well be a Chinese company at this point, they should leave the US or bring all their manufacturing back to the US along with any other US company that sold out to China

Apple got ten exemptions; these five are just the ones it didn't get.  That's actually the reason it's moving production to Texas, because it would have otherwise been prohibitively expensive to build the machine in the US.  Assembly in the US doesn't mean all the parts are made in the US.

 

Also, I'm going to have to pop the balloon and indicate that neither of your extremes make sense.  If it leaves the US, it guts tens of thousands of jobs and robs the country of one of its stars.  Moreover, the simple reality is that it's currently impossible to bring all its manufacturing to the US at the scales and flexibility it needs.  And if it did move production to the US, it would likely be highly automated (like the Mac Pro plant) and thus negate the point of bringing production back.

[Brooksie359]

On 9/30/2019 at 7:25 PM, dizmo said:

I don't imagine cables and wheels are going to be hard for them to source in country, or to make themselves.

I also don't think that it's going to hurt their bottom line that much at all. Those are very small line items they're getting taxed 25% on.

 

You say it'll bite them...haha, no, no it really won't.

If they were easily sourced from the US then it is likely that they choose these part from china because they were still cheaper after the 25% tariff. Honestly I doubt this will apple at all especially because they probably already had insane margins to begin with and can get away with extremely high pricing so they could just raise the price a little bit. 

[melete]

9 hours ago, Kilrah said:

Yes, but what he means is that some Chinese sellers have lowered their prices to offset the tariffs in order to keep their business, short-circuiting the whole thing.

No, I’m just trolling. Consumers (which could be the public or companies buying imported components like Apple) inevitably pay for tariffs because tariffs are a tax on the consumption of imported goods. It’s just another sort of sales tax, essentially. 

[2DollaKoala]

On 9/30/2019 at 4:55 PM, sowon said:

It might not be all doom and gloom for Apple though, as the company says a US manufacturing might be worthwhile due to the value of the new Mac Pro, and the migration of manufacturing of the new Mac Pro to Austin, TX.

Plus... the weight. Those systems will weigh at least 50 pounds. Like big SUV's it's cheaper to build the heavy appliance in the market that's going to buy the most of them to save on shipping.