The latest escalation has placed consumer electronics, including smartphones, at the centre of the dispute, with experts warning that new tariffs and export controls could send prices soaring.
These controls, which take effect on 10 February, will not only disrupt manufacturing and supply chains but could also drive up costs for tech companies and, by extension, consumers.
“With these tariffs, American consumers will pay the price, and they are also going to hurt American businesses,” said Şebnem Kalemli-Özcan, a professor of economics at Brown University. “When a good is more expensive for a company to buy, the company is going to sell it for more to the consumer.”
Apple is caught in the middle of the latest trade battle, with its iPhones assembled in China and shipped to the US accounting for roughly a third of its annual sales, according to USB.
However, many investors remain convinced that Apple will once again secure an exemption from the tariffs.
This time, the Apple chief appears to be employing a similar strategy. Cook reportedly donated $1 million (£800,000) to Trump’s inaugural fund, according to Axios, and has spent years cultivating a close relationship with him through carefully staged meetings and dinners. Trump, for his part, has publicly praised Cook’s influence: “That’s why he’s a great executive — because he calls me and others don’t.”
China’s rare earth metals
China has announced new restrictions on exporting 25 critical metals used in electronics such as smartphones and laptops, including tungsten, ruthenium, molybdenum, and tellurium.
An abandoned open-pit tungsten mine in Spain. Most tungsten mining and processing occurs in China (Photo: Antonio Cendal/ Getty Images/iStockphoto)
Tungsten, one of the rarest elements on Earth, is used in aerospace components, wear-resistant metals, and the tiny motors that generate vibrations when a smartphone receives a call or message. The majority of the world’s tungsten is mined and processed in China.
Dr Sami Bensassi of Birmingham Business School says that China had already effectively cut off direct shipments of these rare minerals to the US.
Dr Bensassi added that China’s policies were designed to reinforce its dominance in battery production and other key technological components – which makes it more difficult for Apple to re-route its supply chain through other countries, rather than China.
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Read MoreBank of America Securities said ramping up iPhone manufacturing in India could help limit the consequences of the tariffs.
However, India itself may soon face additional US tariffs, complicating Apple’s efforts to move its supply chain elsewhere.
Dr Bensassi argues that while the impact of China’s export controls may be limited because many have already been implemented, the new US tariffs will hit consumers the hardest.
“The trick is that consumers wouldn’t know the price without the tariffs for the next iPhone model,” he explains.
“Apple could also accelerate the release of its next generation of products and price them higher, using the uncertainty around trade policies to justify the hike.”
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