Impact of Visa Fees on Talent: Trump’s Tariffs Endanger Technology’s Top Professionals

Posted on September 23, 2025 by Igor Mitreski

Greetings from TechScape! I’m back in the US and busy writing this from the plane. This week’s Tech News revolves around a significant deal involving Donald Trump, which has implications for the high-tech industries in China, the UK, and the US due to unexpected fines on favored visas.

Trump’s Talent Tariff: Visa Fines Threatening the Industry’s Most Valued Employees

Last year, a major tech firm brokered an agreement where tens of millions of dollars went to Trump’s presidential campaign in exchange for favorable policies that foster access to the president and stimulate industry growth. If Elon Musk is included, this figure rises to hundreds of millions. However, Trump’s new fees on frequently utilized visas pose a threat to this arrangement.

My colleague Johanna Bouyan reports:

On Friday, Donald Trump signed a declaration imposing a $100,000 annual fee on H-1B visa applications, which could have significant repercussions for the US tech landscape.

The potential crackdown on H-1B visas has become a central issue for the tech industry. Government data reveals that around two-thirds of H-1B visa employment is tech-related, as employers utilize these visas to attract engineers, educators, and healthcare professionals.

In response to the initial announcements, Amazon, Microsoft, and Google encouraged their overseas staff to return quickly to the US and advised dependents against traveling abroad. The implications of the fines that began at 12 AM on September 21 were uncertain, raising concerns within their HR departments. The White House later clarified that the fees would only apply to new applicants and would not impact existing visa holders with six-figure annual fees. The US Secretary of Commerce reiterated this point. With the camera Fees will be collected on an annual basis.

These penalties are particularly alarming for immigrants from India. Approximately 700,000 H-1B visa holders reside in the US, with 71% originating from India. Chinese nationals make up about 10% to 15% of this group. Additional noteworthy insights: nearly three-quarters of H-1B visa holders are male, earning a median salary of around $120,000. If these penalties survive potential legal challenges, the cost of hiring these workers in the US could become prohibitive for employers.

“Fearing for Our Talent”: India Responds to Trump’s H-1B Visa Fee Increase

These fees serve as tariffs on talent, paralleling Trump’s duties on goods from nearly all US trading partners. The president’s protectionist approach towards professional work resonates like his stance on imports from Vietnam. Additionally, similar to these tariffs, the rationale behind his employee fees is challenging to discern. The US lacks adequate domestic manufacturing capabilities to assemble smartphones fully and will not erect barriers preventing parts made abroad. Likewise, it doesn’t possess a robust pipeline of trained technical workers comparable to those in India and China, creating a talent gap that many leading American companies currently face. Enter H-1B. Advocates of the program, including Elon Musk of Tesla, argue it will address the talent void and attract essential skilled workers to maintain competitiveness. Musk, a US citizen originally from South Africa, once held an H-1B visa himself.

In December, Trump expressed his support for the program.

“I have a lot of H-1B visas for my properties. I support H-1B. I’ve utilized them many times. It’s a valuable program,” said the president. New York Post.

Will Trump’s Talent Tariff catalyze a resurgence of technical manufacturing, prompting the American education system to inspire more students toward technical careers? Perhaps not while he continues to battle against a university system that trains many international students who subsequently obtain H-1B visas and contribute to American companies.

At Last: Trump Finalizes the TikTok Transfer Agreement

Will the TikTok deal go through? Photo: Dado Ruvić/Reuters

Five years later, TikTok faces uncertainty, having dealt with multiple deadline extensions, and Trump claims he has finalized an agreement to transfer TikTok from its parent company in Beijing to US ownership, which is expected to be accepted.

“We have a deal concerning TikTok. A group of major companies is interested in acquiring it,” Trump stated last Tuesday without elaborating.

Since the initial vague announcement, further details have emerged. Trump mentioned in an interview on Fox News Sunday that media mogul Rupert Murdoch and his son Lachlan, CEO of Fox Corporation, might be involved in the deal. Additionally, Michael Dell, founder and CEO of Dell Technologies, is reportedly a part of the discussions.

White House officials revealed that Larry Ellison, who recently lost his Forbes title as the world’s richest man to Elon Musk, would lease and manage TikTok’s algorithm, extending to the management of data collected from American users.

Broader Technology Landscape

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Attention Big Spenders: Starmer and Trump’s Multi-Billion Dollar Tech Agreement

Last week, Trump and Keir Starmer met at Checkers, the Prime Minister’s residence. Photo: Evan Vucci/AP

Just a week ago, Keir Starmer and Trump announced a commitment from numerous US companies to invest £31 billion in the UK technology sector in the coming years.

Brad Smith, president of Microsoft, hailed it as the “largest announcement” with a commitment of £22 billion over the next four years. Google has also promised to invest £5 billion.

CoreWeave, a US data center company, plans to invest an additional £1.5 billion in the UK, including its site in North Lanarkshire, Scotland. The US software company Salesforce is contributing another $2 billion in the UK.

Nvidia, the leading AI chip manufacturer, has pledged a £11 billion investment in the UK economy as part of this agreement, providing up to 120,000 Blackwell GPUs for projects developed over the coming years in the UK.

A notable critique has suggested that this contract resembles the US’s Stargate project, which promises either $500 million in commitments from high-tech companies or the establishment of the world’s largest data center in Abu Dhabi. The government isn’t obliged to oversee the significant financial transactions. Nvidia announced on Monday that it would invest $100 million in OpenAI, which is more than three times its UK commitment.

Nick Clegg, former UK Deputy Prime Minister and past top policymaker for Meta, criticized the arrangement as a “second-class offer” for the UK in the US technology market.

At a Royal Television Association meeting in Cambridge, Clegg stated that the relationship between the UK and the US tech sectors is heavily lopsided and that the announcement primarily serves US businesses.

He cautioned that the UK risks becoming overly dependent on the US tech industry instead of fostering its own capabilities.

“These companies need these infrastructure resources anyway,” he noted. “They are constructing data centers globally. Perhaps they’ve merely made a token effort to align with the timing of this week’s state visit, but the flow of benefits isn’t mutual.”

“We are technically becoming a kind of vassal state. This is a reality. As soon as our high-tech companies begin to grow in size and ambition, they must turn to California.”

Learn More About Tech in the UK

Source: www.theguardian.com

Trump Proposes Tariffs on Countries “Discriminating” Against US Technology

Posted on August 26, 2025 by Igor Mitreski

Donald Trump has warned of potential tariffs and export limits on nations that implement taxes, laws, or regulations targeting major tech firms like Google, Meta, Amazon, and Apple.

“All digital taxes, laws, rules, or regulations aim to harm or discriminate against American technology,” Trump stated in a post on his social media platform, Truth Social.

He pointed out that such measures include a 2% revenue collection, exemplified by the UK’s digital services tax, which generates approximately £800 million annually from leading tech companies worldwide.

“As the President of the United States, I stand against any country that attacks our exceptional American tech firms,” Trump remarked. “If these discriminatory lawsuits are not withdrawn, I will impose a significant additional fee on that country’s exports to the U.S., restricting access to protected technologies and chips.”

Trump’s ultimatum adds pressure on both the UK and the EU, especially regarding regulations aimed at limiting the dominance of major tech companies through the Digital Services Act.

Numerous EU nations, including France, Italy, and Spain, have already instituted digital services taxes.

U.S. officials have criticized the UK’s Digital Services Tax (DST), which has been active since 2020, though it was kept in place after a May agreement with the Trump administration.

Trump has expressed concerns over the detrimental effects DSTs worldwide have on American firms.

In February, he signed an executive order titled “Interesting Foreign Tax and Unfair Fines and Penalties” directed at U.S. businesses and innovators.

It surfaced in April that Keir Starmer proposed a reduced headline rate for U.S. tech giants regarding DST, while simultaneously taxing companies in other nations.

“American and U.S. tech companies are not the world’s ‘piggy banks’ or ‘doormats’,” Trump stated on Monday. “Respect America and our outstanding tech firms, or face the consequences.”

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This warning from the president follows a recent joint statement from the U.S. and the EU committed to addressing “unfair trade barriers.”

However, the EU has not pledged to amend digital regulations individually.

In June, Canada repealed its Digital Services Tax, described as a “direct and blatant” move to facilitate smoother negotiations with its neighbors.

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How Nintendo Navigates Trump’s Tariffs to Ensure the Switch 2 Launch

Posted on June 5, 2025 by Igor Mitreski

n Nintendo enthusiasts across the United States are breathing a sigh of relief as they unwrap their packages containing the new Nintendo Switch 2 gaming console. This comes amidst unresolved trade tariffs implemented during Donald Trump’s administration. Nintendo’s pre-order delays indicated that a May launch seemed more aspirational than guaranteed. The anticipated price initially soared to $450, but the worst fears of consumers did not materialize.

Nevertheless, Nintendo’s battle against Trump’s tariffs isn’t over yet. The Japanese gaming titan managed to introduce the device just before a 90-day tariff suspension issued by the former president. However, if tariffs in regions like India and Japan revert to those proposed during Trump’s “liberation day” speech earlier in April, analysts suggest Nintendo may have to navigate another fraught trade landscape.

The price of the Switch 2 during the holiday season could exceed that of its launch. Competing gaming hardware brands, and virtually all other electronics firms shipping to the U.S., are closely monitoring the Switch 2 narrative.

“What saved Nintendo in this instance was when Trump caved,” stated Robert Johnson, Professor at Notre Dame and International Economist.

Vietnam’s tariffs forced Nintendo to adapt

Since its debut in March 2017, the Switch has become one of the top-selling gaming consoles of all time, with over 150 million units sold globally. Nintendo unveiled its successor in January, providing full details during a livestream on April 2nd, announcing a release date of June 5th at $450 in the U.S. (Or $500 when bundled with Mario Kart World). Just hours later, Trump addressed the nation, announcing new tariffs on imports from countries with trade deficits with the U.S.

Among these tariffs is a 24% levy from Japan, where Nintendo is headquartered, and a 46% tariff from Vietnam, where much of the Switch’s manufacturing takes place. Stock market fluctuations left Nintendo fans wondering if these abrupt tariffs would increase costs for consumers.

U.S. pre-orders for the Switch 2 were initially set to start on April 9th, but Nintendo postponed to “evaluate the potential effects of tariffs and market developments.” The release date of June 5th remained unchanged. Gamers expressed their frustrations on social media, targeting much of their anger towards the Trump administration rather than Nintendo. Pre-orders resumed on April 24th, with units selling out in no time.

Nintendo has not provided immediate comments on the situation.

Saved by ‘tacos’ after preparing for the wrong tariffs

Johnson remarked, like many home appliance manufacturers, “Where is the production happening?”

In 2019, near the end of Trump’s first administration, gaming companies began relocating production for the Switch from China to Vietnam to avoid U.S. tariffs on Chinese goods. While Nintendo still produces some Switch items in China, these units are generally directed to non-U.S. markets. Other prominent tech firms like Apple have similarly shifted manufacturing away from China to nations such as India to diminish tariff impacts.

Gamers lined up outside Nintendo’s store in New York. Photo: Alexi Rosenfeld/Getty Images

This strategy became contentious when the current administration announced a 46% tariff on imports from Vietnam, catching virtually everyone off guard, according to Johnson. These impending tariffs and the uncertainty they generate can affect the pricing strategies of nearly all consumer technology products reaching the U.S.

Sony and Microsoft, both slated to release new consoles in 2027, are likely to encounter similar hurdles to those faced by Nintendo.

“Setting up new production facilities takes considerable time and capital investment. Manufacturers prefer operating in a stable environment,” Johnson noted. “The current trade climate is the exact opposite.”

Tariffs tied to the release date could have easily inflated Switch 2 prices or delayed its rollout. However, Nintendo avoided this predicament due to the Trump administration’s withdrawal. This scenario is described in financial terms as “Taco,” stemming from Trump’s call for a 90-day tariff suspension to facilitate negotiations with the affected country—allowing the Switch 2 to launch in a timeframe where import duties were not in effect.

Even if negotiations with Vietnam ultimately fall through, reports indicate Nintendo has already shipped approximately 746,000 Switch 2 units to the U.S., which remain exempt from increased tariffs.

Higher add-on costs

Nintendo consumers will not escape the impact of customs duties. The company has indicated that accessories related to the device, which comprise a significant portion of the Switch’s dual functionality, are now experiencing price adjustments. So far, CNBC reports that the dock for playing the Switch on a larger screen costs an additional $10, while the straps for the two controllers are up by $1. Johnson also expressed that he wouldn’t be surprised if Nintendo contemplates increasing console prices over the holiday season, particularly if Trump proceeds with the 46% tariff in Vietnam.

“It’s hard to envision Trump’s administration publishing numerous articles about how he ruined Christmas during the holiday season,” Johnson remarked. “So I hope they find a way through this; still, like everyone else, I am uncertain.”

However, there’s another factor motivating Nintendo to minimize price hikes. A significant portion of its revenue doesn’t come from console sales. Instead, the real profit drivers for Nintendo and its competitors are software and online subscriptions, which are not impacted by customs duties.

“Ultimately, Nintendo aims to sell consoles to enable game and accessory purchases,” Johnson noted. “As a result, they may be inclined to keep console prices down.”

Source: www.theguardian.com

Apple’s Triple Challenge: Tariffs, AI Issues, and Fortnite Setbacks

Posted on May 27, 2025 by Igor Mitreski

Greetings and welcome to TechScape. In this week’s edition: Apple faces challenges on several fronts, OpenAI is ramping up its ambitions, and Trump is alienating some of his supporters through cryptocurrency ventures.

Apple Grasped in Three Challenges: Tariffs, AI, and Fortnite

Once unassailable, Apple has begun to reveal vulnerabilities. CEO Tim Cook struggles to address the tariff threats that could inflate iPhone prices. The AI capabilities offered by Apple lag behind those of its competitors. Moreover, the company continues to face legal difficulties with Fortnite, losing ground in a high-stakes battle that has significant implications.

On Friday, the President issued a warning regarding a 25% tariff on iPhones not produced in the U.S. Trump stated: “I have informed Tim Cook of Apple that I expect iPhones sold in the U.S. to be manufactured and assembled domestically, not in India.”

A significant majority of iPhones are assembled in China, with Trump enforcing a 145% tariff on exports. Cook, enjoying an exemption from these tariffs, mentioned in a recent earnings call that most iPhones sold in the U.S. next quarter will originate from India, presumably aiming to ease political tensions between China and the U.S.; however, it seems his strategy is falling short.

Cook opted not to join Trump on a recent trip to the Middle East, a decision that reportedly irritated the president. New York Times. Trump notably remarked that Cook was conspicuously absent among high-tech executives during his speech in Riyadh, indicating that Cook’s absence could have costly ramifications for Apple.

Domestically, Apple faces scrutiny over its prolonged efforts to weave generative artificial intelligence into its products. Currently, Apple holds over half the market share for smartphones in the U.S., yet its AI offerings fall short of the competition. For instance, Apple’s struggles with Siri remain evident as it frequently fails to play the desired song, rendering Google’s Assistant far more appealing. Create a podcast that captures intriguing aspects from Wikipedia, easily overshadowing Apple’s efforts.

Discover more about Trump’s tariff threats.

At its 2024 annual developer conference, Apple unveiled plans for its Apple Intelligence features. Summary of failed notifications. An insider spoke to the media regarding internal disarray within Apple’s AI division; this is striking for a company that prides itself on its confidentiality. Competing firms are ecstatic with their new flagship phones, leveraging AI capabilities that Apple cannot match. Siri remains nearly as incompetent as it was 15 years ago, and while the Vision Pro isn’t an AI solution, its poor performance tarnishes Apple’s reputation.

Legally, Apple continues to face setbacks in its litigation against Epic Games, the developer behind Fortnite, portraying itself as a beleaguered player in the tech industry. In late April, a U.S. federal judge revealed that Apple, despite circumventing orders, was infringing on regulations by failing to allow developers to link to alternative payment methods. The judge accused Apple’s top executive of “lying under oath.”

Photo: DadoRuvić/Reuters

Fortnite has made a comeback on the App Store five years after its ban, with Epic allowed to sidestep Apple’s 15% to 30% commission. While Fortnite is a popular title, it does not represent the majority of Apple’s overall App Store revenue. This legal outcome may weaken Apple’s once-tight control over its software ecosystem, allowing developers to better navigate payment options outside of the app, posing a significant threat to Apple’s digital services revenue.

Learn more about Fortnite’s responses.

Bloomberg released a report on Monday, revealing that Meta CEO Mark Zuckerberg is questioning whether his early support of Trump was beneficial. While this is a valid inquiry, it appears that Zuckerberg has maintained control over his digital empire without yielding to the second-term president. He has neglected his company’s diversity and equity initiatives, potentially paying the price for Trump’s volatility. The chef should ponder the return on his $1 million donation to Trump’s inauguration, as he seems to be dancing on a razor’s edge while avoiding bullets aimed at his feet.

OpenAI’s Expansive Week Beyond ChatGPT

Jony Ive and Sam Altman. Composite: Getty Images

This week, OpenAI secured two multi-billion dollar deals as it strives to expand beyond ChatGPT. Comparatively, its major rivals were preoccupied with launching a new version of their flagship model, Claude. While some may find this lack of product releases concerning, I’d argue it’s crucial for staying competitive against behemoths like Google, valued at $2 trillion, and Microsoft, worth $3.3 trillion. If you’re not innovating but instead planning to acquire a startup founded by an iPhone designer for billions, you’re not truly in the game.

On Wednesday, OpenAI confirmed its intention to buy IO, an unproven hardware startup co-founded by Jony Ive, for $6.4 billion. Sam Altman and Ive released a blog post announcing that the IO team would integrate with OpenAI to “collaborate more closely with the San Francisco research, engineering, and product teams.” Although Ive will not be employed by OpenAI, his company is set to oversee the design aspects for OpenAI, including software. Bloomberg.

The merger’s objective appears to be clear: to develop AI-infused hardware that achieves the same iconic status as the iMac and iPhone. However, the market for devices focused solely on democratizing AI remains ambiguous. The Human Pin— a product reminiscent of what Ive creates and backed by Altman and Apple alumni—did not gain traction.

Read more about this ambitious acquisition.

On Thursday, OpenAI announced plans for a massive data center investment in Abu Dhabi, projected to reach hundreds of billions of dollars. This project is part of Stargate, a $500 million initiative in AI led by Nvidia, Oracle, OpenAI, SoftBank, among others. Initially envisioned as a domestic initiative, Stargate has evolved into a global venture through its collaboration with the UAE, following Trump’s AI announcement.

As these startups initiate major advancements, OpenAI’s CEO has garnered considerable public attention this week. Two newly published books—one complimentary and one critical—chronicle the rise of OpenAI. “Optimists” by Keach Hagey in the Wall Street Journal presents a biography of Altman, while “The Atlantic Empire” by Karen Hao delineates the timeline from the company’s founding through Altman’s recent suspension and reinstatement in 2023. Together, they provide a dual narrative exploring the complexities of Sam Altman’s character. The underlying question remains: is he a visionary or a ruthless figure with a relentless pursuit of progress?

Regardless, armed with billions and having recruited Apple’s second-most recognizable figure, Altman seems determined to fill the void left by Steve Jobs.

Stay Updated on This Week’s AI News

Trump Hosts Crypto Investors at a Private Dinner

Photo: Jim Lo Scalzo/EPA

Trump hosted a dinner for prominent crypto investors at a private golf club in Virginia on Thursday night. According to an analysis by The Guardian, nearly half of Trump’s top investors have incurred losses on their investments. Niamh Rowe reports:

Among the 220 winners, 95—approximately 43%—have collectively lost $8.95 million since the token’s launch in January, based on trading histories and portfolios as of May 21.

The user “Gant” has reportedly faced the most significant loss, racking up a $1.06 million deficit despite ranking fourth on the leaderboard, while “Meow” has lost $621,000 despite attaining VIP status.

$Trump has become part of the “Meme Coin” movement, referring to cryptocurrencies inspired by internet phenomena. Although Trump is a significant figure in the online culture surrounding cryptocurrency, he doesn’t equate to a meme like Dogecoin’s Shiba Inu mascot.

The definition of a Memecoin provided by Coinbase aligns $Trump with other tokens. Coinbase notes that a Memecoin is “often backed by an enthusiastic online community” and “associated with entertainment rather than practical utility.” Trump’s coin lacks any tangible financial or physical backing, representing a volatile speculative asset.

Learn more about Trump’s cryptocurrency escapades.

Expansive Tech Landscape

Source: www.theguardian.com

Trump Proposes 25% Tariffs on Non-Domestic Apple and Samsung Mobile Phones

Posted on May 24, 2025 by Igor Mitreski

Donald Trump has threatened to implement a 25% tariff on iPhones if they are not produced in the United States.

The president wiped out approximately $70 billion (£52 billion) in company stock following a post about the Truth Social platform, emphasizing that iPhones sold in the US must be manufactured within the country.

Trump stated: “I have notified Apple’s Tim Cook that I expect iPhones available for sale in the United States to be produced domestically, rather than in India.”

Following Trump’s comments, Apple’s stock dropped by 2.6%, slightly below the company’s valuation, coming in just under $3 trillion.

Apple is not the only one affected. In statements made to a White House reporter on Friday, Trump either imposed a 25% tariff on Samsung and other phone manufacturers producing outside the US or labeled it as “unfair.”

“When they set up plants here, there will be no tariffs; hence, they will build here,” Trump remarked.

Last month, Trump cautioned Apple investors with a series of tariff announcements targeting Chinese products, with the cumulative tariff reaching 145%. However, shortly afterward, his administration announced an exemption for smartphones and computers.

Reports indicated that Apple intended to relocate all iPhone assembly for the US market to India, trying to mitigate the repercussions of Trump’s trade conflict with China.

Apple’s CEO, Cook, mentioned in a revenue call this month that the majority of iPhones sold in the US during the June quarter had “India” as their country of origin. While the company keeps its production details confidential, analysts suggest that around 90% of smartphones are assembled in China.

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The US constitutes Apple’s largest iPhone market, with over 60 million mobile phones sold annually.

This month, Trump criticized high-tech companies and their CEOs via social media. “I had a slight issue with Tim Cook,” he remarked. “We aren’t interested in you producing in India; India can manage on its own… We want you to manufacture here.”

Experts caution that relocating iPhone production to the United States could be prohibitively costly, citing the lack of facilities and flexible labor for Apple to utilize compared to China. Financial services firm Wedbush Securities noted last month that an iPhone produced in the US would cost three times more than the current price of $3,500.

Source: www.theguardian.com

Used Car Retailer Carvana Sees Potential Business Benefits from Trump’s Tariffs

Posted on May 13, 2025 by Igor Mitreski

Automakers are concerned that President Trump’s tariffs on imported vehicles and auto parts could soon drive up expenses and impact profits.

However, one company in the automotive sector sees tariffs as a potential benefit. Carvana, an online used car retailer known for its unusual “vending machine” towers for vehicles, is optimistic.

The tariffs, which include a 25% tax on automobiles produced in Mexico, Canada, Germany, and various other nations, are likely to drive up prices for new cars and trucks, pushing more consumers towards second-hand options. The administration announced on Monday that lowered tariffs on Chinese imports will not affect those on vehicles and auto parts.

“As car prices increase, Carvana finds itself in a relatively advantageous position as consumers seek more affordable and higher-quality vehicles,” stated Ernie Garcia, the founder and CEO of the company, in a recent interview. “We anticipate that this shift will lead more customers to second-hand cars and savings from online purchases.”

Trump asserts that the purpose of imposing tariffs is to encourage manufacturers to produce more goods and create jobs in the U.S., although he also suggests they will help address issues like illegal immigration and drug trafficking.

Automakers are preparing for the anticipated repercussions.

Recently, General Motors indicated that tariffs could elevate costs by $2.8 billion to $3.5 billion this year. Ford, which produces more vehicles domestically than GM, estimates a net cost of $1.5 billion due to tariffs. Toyota, importing many vehicles from Japan, predicted costs of $1.3 billion just for March and April.

Analysts warn that prices for certain imported vehicles might soar by as much as $10,000, and new vehicle sales could slow significantly this year.

Alan Hague from a consulting firm in Fort Lauderdale noted that Garcia’s perspective aligns with consumer behavior trends as retail dealers brace for changes.

“I believe we will see an increase in second-hand car sales due to tariffs, and more customers will flock to Carvana’s website as it remains their primary focus,” he remarked.

However, potential drawbacks exist. Should tariffs lead to a recession or significant price hikes in vehicles, both new and used car sales could decline. Currently, used cars at auctions average about $1,000 more than just two months prior.

Hague remarked that it may take a while for the full effects to manifest, as prices for most vehicles on dealer lots have not yet risen dramatically. The first set of imported models subjected to tariffs, enacted in early April, is just starting to arrive, with customs duties on engines, transmissions, and other parts coming into effect shortly after.

Regardless of the outcome, Carvana finds itself in a stronger financial position than in previous years.

In the wake of the Covid pandemic, which propounded a surge in online used car sales, Carvana became a favorite among investors, resulting in soaring stock prices. However, as demand began to wane, the company faced considerable losses while holding a considerable inventory of vehicles purchased at higher costs.

Simultaneously, rising interest rates followed Carvana’s acquisition of Adesa, a used car auction company, leaving analysts wary of the company’s survival due to the increased debt and losses. By February 2023, inventory levels had plunged.

Nonetheless, Garcia managed to renegotiate debts, lower costs, and streamline Carvana’s operations. Over several months, the company reduced its workforce, sold off inventory, and successfully turned Adesa into a cost-effective supplier for vehicles. Recently, the facility was established at 11 Adesa locations to repair and refurbish used vehicles.

These efforts have begun to pay off. Last week, Carvana announced record figures for the first quarter of the year. Profits reached $373 million, a significant increase from $49 million the previous year, selling 133,898 used cars—46% more than in the first quarter of 2024. The average gross profit per vehicle stood just below $7,000.

The company achieved this by maintaining a leaner inventory, reducing advertising spend, and employing around 4,000 fewer people than three years ago, effectively recovering much of the lost ground.

“From 2017 to 2021, our focus was on growth,” explained Garcia. “Over the past two years, we’ve unlocked efficiency, and that’s driving significant performance improvements.”

Garcia now aims for Carvana to sell between 500,000 and 3 million vehicles annually within the next five to ten years.

Many Wall Street analysts are regaining confidence in the company’s prospects, but a significant challenge remains. Finding skilled auto mechanics is quite difficult, and Carvana will require hundreds more to achieve its aim of refurbishing used cars for sale.

“Labor is a major bottleneck,” stated analyst Ronald George from City in a recent report.

Garcia expresses confidence in Carvana’s revamped business model and believes it will thrive, irrespective of shifts in U.S. trade policies.

“I think it demonstrates that customers are willing to buy cars online and that our online model delivers real value,” he concluded.

Source: www.nytimes.com

GM Revokes Profit Forecasts as Trump’s Tariffs Decrease

Posted on April 29, 2025 by Igor Mitreski

On Tuesday, the automaker announced that General Motors has revised its profit growth forecasts for the year, citing uncertainties stemming from President Trump’s trade policies.

This month, the Trump administration declared a 25% tariff on imported vehicles and plans to impose the same duty on imported parts starting Saturday. Typically, about half of GM’s sales in the U.S. come from vehicles manufactured overseas, primarily in Canada and Mexico.

During a conference call with reporters, Paul Jacobson, the company’s CFO, stated, “We prefer not to discuss figures that are mere speculation regarding the administration’s actions.”

He further emphasized that GM perceives the potential impact of Trump’s tariffs as “material,” indicating a significant influence on the company’s revenue this year.

GM reported a profit of $2.8 billion for the first quarter on Tuesday, reflecting a 7% decrease compared to the prior year. The profits were primarily driven by a 14% drop in earnings before North American interest and taxes, while the international business reported modest gains.

Previously, the company had forecasted net profits of $11.2 billion to $12.5 billion for 2025, which would effectively double last year’s net profit of $6 billion.

“We cannot rely on earlier projections,” Jacobson remarked.

Along with the 25% tariff on imported cars, the Trump administration has elevated tariffs on imported steel and aluminum, raising the costs of metals crucial for car manufacturing. Additionally, tariffs on China have increased significantly, with several other countries also facing higher duties, which have temporarily decreased to 10% for a 90-day period.

Jacobson described GM’s discussions with the Trump administration regarding tariffs as “productive,” though he declined to provide further details, stating, “I don’t want to appear as negotiating in public.” He expressed hope for greater clarity on the tariff situation within the automotive sector.

Jacobson noted that the tariffs only became effective on April 3, thus having a negligible effect on the company’s financial results for the first quarter. “We have a solid foundation for our operations,” he reported.

GM has previously stated plans to ramp up production of pickup trucks at its facility located near Fort Wayne, Indiana.

Source: www.nytimes.com

In March, Apple Airlifted iPhones worth $2 billion from India amid Trump’s looming tariffs

Posted on April 16, 2025 by Igor Mitreski

Indian suppliers Foxconn and Tata, key partners of Apple, shipped approximately $2 billion worth of iPhones to the US in March. Apple took this step to avoid impending tariffs imposed by former US president Donald Trump.

To counter the potential increase in costs due to tariffs, Apple ramped up production in India and chartered a 600-tonne freight to airlift iPhones to the US. This operation involved using at least six cargo jets, described by a source as a strategy to “beat the tariffs.”

In April, the US administration enforced a 26% duty on imports from India, but later suspended most obligations for three months, except for those concerning China.

According to commercial customs data, Foxconn, Apple’s leading Indian supplier, exported $13.1 billion worth of smartphones in March, including various iPhone models. Their total cargo shipped from India to the US amounted to $5.3 billion this year.

Tata Electronics, another Apple supplier, exported $612 million worth of smartphones in March, a significant increase compared to the previous month. This included iPhone 15 and 16 models. Apple, Foxconn, and Tata have not responded to requests for comment.

Customs data revealed that all Foxconn shipments in March were air freighted from Chennai, India, and landed in various US locations, with Chicago being the primary destination.

Following the Chennai flight, Trump exempted smartphones and other electronic devices, mainly from China, from tariffs. However, these exemptions were expected to be temporary.

To streamline shipments, Apple reduced the customs clearance time at Chennai airport from 30 to 6 hours, benefiting Indian airport authorities.

Source: www.theguardian.com

The impact of Trump’s tariffs on iPhone prices and available affordable alternatives

Posted on April 15, 2025 by Igor Mitreski

Amid a tariff frenzy that caused panic among consumers eyeing iPhones, President Trump announced tariff exemptions for electronic devices like smartphones and computers on Friday. This brought relief as there were concerns about the possibility of a $2,000 iPhone.

However, just two days later, the Trump administration hinted that smartphones and computers might face new tariffs targeting semiconductors or chips, potentially leading to a more expensive iPhone. Talk about a rollercoaster!

Despite the uncertainty over iPhone prices due to tariffs, there are still cheaper alternatives available, such as purchasing previous models.

The key lesson here is that to save money in the high-tech world, it’s best to use your devices for as long as possible.

“Buy the best and hold on,” advised Ramit Sethi, a personal finance expert. “Keeping an item for longer reduces the overall cost of ownership.”

The future costs of high-tech hardware remain uncertain. Nintendo recently postponed plans to launch the $450 Nintendo Switch 2 due to tariff uncertainty. Additionally, prices for accessories like phone chargers are increasing on platforms like Amazon.

To navigate future technology purchases effectively, consider holding onto your devices for longer periods to maximize their value.

Hold onto your devices to save money

Replacing your tech frequently can add up in costs. Calculating the true cost of ownership can help you make informed decisions when purchasing new devices.

By holding onto your devices and using them for a longer period, you can significantly reduce the total cost of ownership over time.

This principle applies not just to smartphones but also to computers and tablets. The longer you keep your devices, the more value you can extract from them.

Treat your devices like you do your car

High-tech products are designed to be long-term investments. Many devices today are built to last for several years, yet consumers tend to upgrade frequently, similar to how people buy new cars more often than necessary.

Developing the habit of replacing your device’s battery periodically can help extend its lifespan and save you money in the long run.

As manufacturers improve repairability, replacing components like batteries becomes more accessible and cost-effective.

Consider buying a refurbished phone

In times of uncertainty regarding tariffs and rising prices, opting for refurbished or second-hand phones can provide a cost-effective alternative to buying new models.

Even in the face of potential price increases due to tariffs, there are plenty of affordable options available in the market, similar to buying used cars instead of brand new ones.

By exploring refurbished options and older models, you can find cost-effective solutions to high-tech purchases.

Rather than worrying about the hypothetical $2,000 iPhone, focus on more pressing financial matters like building an Emergency Savings Fund.

In challenging economic times, it’s essential to prioritize your financial stability over luxury purchases like the latest smartphones. Focus on what truly matters to secure your financial well-being.

Source: www.nytimes.com

Chip tariffs bolster US AI infrastructure as Nvidia looms larger.

Posted on April 15, 2025 by Igor Mitreski

Nvidia, a chip designer, has announced plans to invest up to $500 million (£37.8 billion) in artificial intelligence infrastructure in the United States over the next four years. This move comes in response to President Trump’s tariffs, with signs of manufacturers shifting their investments to American businesses.

The decision follows Trump’s recent tariffs on semiconductors, which are primarily produced by Nvidia in Taiwan. The company’s CEO, Jensen Huang, visited the president at Mar-a-Lago earlier this month, prompting repeated threats from Trump. Nvidia aims to establish fully operational “supercomputer” facilities in the US and collaborate with manufacturing partners to construct factories.

Production of the Blackwell graphics processing unit has already commenced at the TSCM’C factory in Phoenix, Arizona. Additionally, new plants are being developed at Foxconn in Houston and Wistron in Dallas, with expectations of increased mass production within the next 12-15 months.

Huang emphasized that enhancing American manufacturing capabilities is crucial for meeting the growing demand for AI chips and supercomputers, thereby strengthening the company’s supply chain and resilience.

The White House hailed Nvidia’s commitment as a result of the “Trump effect.” Nvidia’s stock market value has surged over the years, driven by the demand for AI chips, but faced challenges due to tariff uncertainties resulting in a drop in stock prices.

Global markets reacted cautiously, hoping for some relief from Trump’s new taxes. While markets in Japan and South Korea rose, Hong Kong and China experienced declines. In Europe, markets showed gradual recovery, with the UK’s FTSE 100 index rising, along with Germany’s DAX and France’s CAC.

Trump’s plans to impose tariffs on semiconductor and drug imports have raised concerns. The US Department of Commerce has launched an investigation into the impact on national security. Amidst these decisions, companies like Novartis are investing in the US drug sector to mitigate tariff threats.

Source: www.theguardian.com

New US Tariffs: Smartphones and Computers Exempted from China by Trump Administration

Posted on April 12, 2025 by Igor Mitreski

Following more than a week of tariffs on Chinese imports, the Trump administration released new rules on Friday that exempted smartphones, computers, semiconductors, and other electronic devices from certain fees. This move significantly lowered prices for high-tech companies like Apple and Dell, as well as benefiting consumers who purchase products like iPhones.

A message was issued by US Customs and Border Protection on Friday, listing the products that had previously been subjected to tariffs on Chinese goods. Certain exclusions were granted for modems, routers, flash drives, and other tech products not commonly manufactured in the US.

The exemption does not completely eliminate tariffs on electronic devices and smartphones. The administration previously imposed a 20% tariff on Chinese goods due to concerns about the country’s involvement in fentanyl trade. Additionally, tariffs on semiconductors, crucial components in electronic devices, are expected to increase.

This exemption marks a significant development in the ongoing trade war with China and is expected to have far-reaching effects on the US economy. Tech giants like Apple and Nvidia will benefit from avoiding heavy taxes that could have impacted their profits. Consumers rushed to purchase iPhones to avoid potential price hikes, relieving concerns about inflation and economic instability.

While the tariff relief provides temporary respite for the tech industry, the Trump administration has indicated plans for further trade investigations, particularly targeting semiconductors. The aim is to secure the US supply chain for vital technologies used in various products, including smartphones and automobiles.

President Trump’s shift in trade policy has implications for various industries, especially as it relates to China. The tech sector, in particular, has closely engaged with the administration to navigate the changing landscape of tariffs and taxes on imports. Apple CEO Tim Cook has been instrumental in lobbying for exemptions and advocating for US manufacturing of tech products.

As the trade tensions continue to evolve, the tech industry remains a focal point in the US-China trade relationship. Consumers may see fluctuations in prices for electronic devices as the two countries negotiate their trade terms.

Source: www.nytimes.com

Nintendo Switch Game Console Release Threatened by Tariffs

Posted on April 10, 2025 by Igor Mitreski

For months, Nintendo, the maker of famous video game series like Super Mario Bros. and Donkey Kong, had expected the morning of April 2nd to be a celebration.

For many fanfares, the company has announced the price and release date for the Switch 2, a new video game console for eight years. At an event in New York City, Nintendo’s US President Doug Bowser took to the stage as fans cheered on the arrival of the new game to accompany the console. Mario Kurt, Donkey Kong, Kirby.

That same day, President Trump announced tariffs that piqued the global stock market and put the Mario Party at risk. The new switch took place in Vietnam, one of the countries on the tariff list.

Two days later, Nintendo said it could delay pre-orders for the Switch 2 and raise the price from $450. It was unclear how expensive it was. But on Wednesday, Trump said he has been slowing the expansion of tariffs in Vietnam and many other countries for 90 days. Nintendo has yet to say how delays will affect the price of the Switch 2.

Nintendo’s Whip Saw Experience shows the wider disruption Trump has caused for technology makers and the uncertainty of what the market will look like for consumer technology in the coming months.

In a statement before Trump delayed the expanded tariffs of countries other than China, Nintendo said it plans to release the Switch 2 in June, but did not set a date on whether to resume pre-orders or announce new prices.

Gamers had already taken thousands of people to social media sites like X and Reddit to complain. It is a common practice in the industry for gamers to blame the high costs of corporate greedy consoles and games, but instead they have denounced Trump.

Gamer and Philadelphia writer Jake Steinberg visited New York last week to perform a Switch demonstration.

“People were always saying this modest and they always said, ‘we’re going to keep politics out of the game,’ so the irony is extreme,” Steinberg said. “Well, I’m here.”

For years, Nintendo has been making game consoles in China. However, it moved most of its production to Vietnam during Trump’s first term in 2019, moving into tariffs and the threat of trade war between China and the United States.

These operations appeared to be nothing as Trump’s plans announced last week threatened heavily new tariffs on goods from Vietnam (46%), Japan (24%), Malaysia (24%) and Cambodia (49%).

However, due to the delay announced Wednesday, Nintendo may be one of the lucky ones. The majority of home appliances, including smartphones and other gaming consoles, are still made in China. And they are expected to be subject to a 145% tariff, which is larger than a few days ago. Like most countries, products made in Vietnam still suffer from 10% tariffs.

According to Wedbush Securities analyst Michael Pachter, the delay will increase production and inventory over 90 days, and increase inventory in US inventory. However, for other tech companies like Apple that normally don’t start producing new iPhones until a few months before the release date, that may not be an option.

Nintendo has ended up playing a sensitive game where they decide how much they can raise prices without chasing away gamers who already feel $450 is steep enough, or ultimately, how much they can raise prices without retaining hope that they won’t be hit by the expanded tariffs.

For gaming companies like Nintendo, Sony and Microsoft, selling consoles is just one aspect of their business. If a customer chooses not to purchase a new console, they will not be able to purchase software for the game itself that sells at a higher margin than the hardware.

Pachter added that the cost of consumer tech products could rise all the way, but he added that prices for buzzy items people have been waiting for for years, like the Switch 2, the first console Nintendo released since 2017. He estimated that if the Trump administration proceeded with tariffs, the new costs for Switch 2 could increase by up to $100.

“No one is waiting for a TV to buy on June 5th, so you’re not sure if the TV prices will go up,” Patter said. “They will notice it gradually, but it’s different with the launch of such a product.”

In an interview with news media before Trump’s tariffs were announced, Nintendo’s Bowser said the expected costs of future tariffs were not taken into account at the console’s $450 price. However, analysts are primarily disputing the claim, referring to the $340 price for Switch 2, which is sold in Japan. (Nintendo spokesman said that Japanese models are limited to Japanese, so some are low cost reasons.)

Nintendo will likely wait for the dust to settle down in Trump’s tariff disruption before announcing new prices, said Doug Creutz, an analyst at investment firm Cowen. He added that there is still a possibility that Trump will withdraw from tariffs entirely.

“They don’t need to change prices again,” Krutz said. In the decision, he said he weighed the company: “Are we willing to make less profits in the US? Do you want to protect our profit margins?”

Nintendo has not delayed pre-orders for Switch 2 elsewhere in the world, where costs vary from region to region. $442 in the UK, $435 in Australia and $450 in Canada. Nintendo still does about 30% of its manufacturing industry in China, which it uses to supply non-US buyers, says David Gibson, an analyst at MST Financial.

In the short term, it helps offset some of the costs by the end of February, Nintendo had already shipped 746,000 units of Switch 2 to the US.

“It protects them in a quarter,” he added. “But then the price will be total duties.”

Nintendo is not just a high-tech company that places importance on the trade-off of increasing product prices. Similarly, Apple moved part of its manufacturing industry from China to Vietnam in 2019. Other console manufacturers, such as Sony and Microsoft, will face a similar dilemma when they manufacture their next console, scheduled to be released around 2027.

“We’re going to be attacked by all the big appliance companies, including Samsung, LG, Apple, major TV makers, gaming consoles,” Gibson said. “That’s everything.”

Source: www.nytimes.com

Apple is Dodging Trump’s Tariffs by Shipping iPhones from India to the US, Company Reveals

Posted on April 10, 2025 by Igor Mitreski

Apple is reportedly launching ferry iPhone cargo flights from its manufacturing plants in India to the US in order to counter Donald Trump’s tariffs.

Since March, the tech giant has transported 600 tonnes of iPhones, equivalent to 1.5 million mobile phones, from India after ramping up production at its local factories, as reported by Reuters.

Following President Trump’s call for a 90-day suspension and the pending 26% threatened tariffs on Indian imports, Apple faces the pressure of escalating tariffs on goods from China, where most iPhones are assembled, to a rate of 125%.

A source familiar with Apple’s strategy revealed to Reuters that the company’s objective is to evade tariffs. While India incurs import taxes based on Trump’s actions, it imposes a 10% tax rate.

Analysts caution that iPhone prices could soar after the US imposes hefty tariffs on Chinese imports, with estimates suggesting that the iPhone 16 Pro Max with 256GB storage could see a price increase from $1,199 (£925) to over $2,000.

Reports indicate that Apple aimed for a 20% production boost at its iPhone facility in India, achieved by scaling up the workforce and extending operations at Foxconn’s largest factory in Chennai over the weekends.

The Chennai factory, which churned out 20 million iPhones last year, including the latest models, is part of Apple’s trio of manufacturing plants in India operated by Foxconn and Tata.

This week, the Wall Street Journal reported that Apple planned a temporary surge in iPhone shipments from India to the US to navigate through a “short-term suspension,” while also trying to secure a tariff waiver in China. If all iPhones made in India are redirected to the US, they would meet about half of the US demand this year, according to US Bank analyst Wamsi Mohan.

Experts caution that relocating iPhone production to the US is financially impractical due to factors like labor costs, with analysts at Wedbush Securities indicating a price tag of $3,500 for a domestically manufactured iPhone.

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In a note to investors this week, WedBush analyst Dan Ives stated, “If consumers want a $3,500 iPhone, they need to make them in New Jersey, Texas, or another state.”

Apple has been reached for comment.

Source: www.theguardian.com

How Trump’s tariffs are hindering phone repair in the US

Posted on April 9, 2025 by Igor Mitreski

The tariffs implemented in the US overnight on Wednesday are expected to raise the prices of new smartphones. However, opting to repair an old or damaged device to save money may not necessarily result in a lower bill.

“Unfortunately, I anticipate having to increase my prices for parts,” explained Elizabeth Chamberlain, sustainability director at IFIXIT, a device repair company. “While we are actively seeking domestically-sourced parts, even with higher prices, repairs are still more cost-effective than purchasing new devices.”

Donald Trump’s tariffs could impact smartphone repair costs due to the global supply chain for device components. Many parts for popular Apple and Samsung mobile phones are manufactured outside the US. iPhones are primarily made in China, and companies exporting to the US face over 100% customs duties. India, where Apple and Google also have production facilities, is subject to a 26% tariff. Samsung’s supply chain is mainly in South Korea and could see a 25% tariff if agreements are not reached with the Trump administration.

The tariffs could drive up the demand for phone repairs as individual parts remain more affordable than buying new devices, even with higher prices. Customs duties could add nearly $300 to the price of the latest iPhone.

“It’s too early to determine if the tariff news is leading to increased repair demand, but it makes more sense than ever to repair what we have,” Chamberlain noted. “I believe tariffs could also stimulate demand for renovations and local parts sourcing in the repair industry.”

Increase in Parts Prices

Both large and small repair shops are bracing for higher prices for imported parts. A Brooklyn shop manager, who preferred not to be named, revealed that a national repair chain location is anticipating a 20% price hike for many necessary repair parts.

Dan Fernando, owner of Tecquecia, an independent repair shop in Philadelphia, has already seen fluctuations in prices for components like specific hard drives used for computer repairs. Fernando sources parts from a supplier called MobilesEntrix, which imports parts to the US.

“For phone screen replacements, we charge a $50 flat fee plus the screen cost,” Fernando explained. “Customers may now expect to pay between $80 and $90 for a screen replacement, with the new tariffs potentially resulting in a 50% increase.”

Fernando is also exploring cheaper repair options, stating, “Some people buy parts from eBay or Amazon which I don’t use due to quality concerns.”

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The Attraction of Second-Hand Devices

With the rising costs of new devices and repairs, the second-hand device market, such as Swappa, offers a viable alternative for consumers. Swappa’s top-selling devices currently include the iPhone 13 and 14, according to Ben Edwards, the site’s founder.

“If tariffs persist and drive up new device prices further, I believe many buyers will turn to Swappa and similar platforms,” Edwards predicted. “The latest generation may not offer enough technical advantages to justify the increased costs.”

However, the prices of refurbished devices on Swappa could also rise as sellers adjust to the higher costs of new devices. Edwards explained that market dynamics determine prices on Swappa, with individual sellers setting their own prices.

“Ultimately, demand dictates prices,” Edwards highlighted. “In the Swappa marketplace, sellers have the freedom to set prices based on supply and demand.”

For consumers in the market for second-hand devices, Edwards advised, “Don’t wait.”

Source: www.theguardian.com

Trump’s tariffs leading to decrease in automobile imports and factory closures

Posted on April 8, 2025 by Igor Mitreski

President Trump’s 25% tariff on imported vehicles, which came into effect last week, has already sent tremors through the automotive industry, urging businesses to halt ship cars to the US, shutting down factories in Canada and Mexico, and firing workers in Michigan and other states.

The UK-based Jaguar Land Rover said it will temporarily suspend luxury car exports to the US. Stellantis Idled Factory in Canada and Mexico fired 900 US workers who built Chrysler and Jeep vehicles and supply engines and other parts to those factories.

Volkswagen’s luxury division, Audi, has also suspended exports of cars from Europe to the US, telling dealers to sell whatever they still have on their lot.

If other car manufacturers move in the same way, the economic impact will be severe, leading to rising car prices and widespread layoffs. Auto tariffs are one of the first of several industry-specific collections Trump has in his vision, and can provide early clues as to how companies will respond to his trade policies, such as whether to raise US prices or increase manufacturing prices. The president also said he would like to tax the imports of medicines and computer chips.

Applying new tariffs on imported vehicles could increase costs to consumers by thousands of dollars and significantly reduce the demand for those vehicles. For some Jaguar Land Rover or Audi models, customs duties can be over $20,000 per car.

While many of the initial effects of tariffs were destructive, in at least one case, Trump’s obligations had the intentional impact of increasing production in the United States. Last week, General Motors said it would increase production of light trucks at its Fort Wayne, Indiana plant.

The long-term impact of the 25% tariff is unknown. Many automakers are still trying to find ways to avoid rising prices because consumers can’t afford a new car. Investors are pessimistic. Stocks of Ford Motor, GM and Tesla have declined in trading over the past few days.

“Everyone in the automotive supply chain is focused on what they can do to minimize the impact of tariffs on their balance sheets and prices,” said Kevin Roberts, director of Economic and Market Information at Cargurus, an online shopping site.

However, automakers have never had to sign such high tariff levys with such little notice. Analysts and dealers also had little insight into what the president would do next.

Source: www.nytimes.com

China and tariffs thwart Trump’s Tiktok negotiations

Posted on April 8, 2025 by Igor Mitreski

Last Wednesday, the Trump administration believed there was a plan to save Tiktok.

With the Chinese owner of Tiktok and some of its US investors Officials in Washington said they were working together on a new ownership structure for the popular video app, and the four of them said they were familiar with the situation. The structure said it would help Tiktok meet the conditions of federal law that require apps to find new owners in order to address national security concerns or face a US ban.

Under the plan, new investors will own 50% of the new American Tiktok companies, while Chinese owners will hold less than 20%, the restrictions specified by the law are two. Byte Dance told the White House that Beijing is happy with the general structure, the two people said.

By Thursday morning, a summary of the draft executive order from Trump had been circulating, according to a copy viewed by The New York Times.

The plan then hit the wall. Baitedan, called the White House in the news: Now that President Trump has announced many tariffs on China’s imports, Beijing has not let Tiktok deals go ahead, the two said.

In response, Trump bought more time. On Friday, he suspended federal law enforcement and extended the deadline for the Tiktok contract to mid-June.

“The report says they made the transaction for Tiktok, not for a deal, but for a fairly close Tiktok. China then changed the transaction due to tariffs,” Trump told reporters Sunday to Air Force 1.

The outage highlights how video apps are plagued by the geopolitical struggle between the US and China over trade and technology advantages. It also reveals China’s power over Tiktok’s future in the US, raising questions about whether Tiktok’s deal will end.

“The parties are so proud to negotiate that we are stuck between two huge economies that are stabbing each other’s heads,” said Ampam Chander, a professor of law and technology who targeted Tiktok, a professor of law and technology at Georgetown University. “Tictok was a mouse that got caught up in his feet between these two elephants.”

The Chinese embassies in Washington, Tiktok and Baitedan did not respond to requests for comment. The White House introduced the Times to Trump’s post on true social that announced an extension of his for debate over the app.

The administration and ordinances were struggling the structure that allowed Tiktok’s biggest US investors, including the Atlantic General and the Susquehanna International Group, while government officials brought in new funds to dilute Chinese ownership of the app.

The interim terms of the transaction said new investors will own 50% of the new American Tiktok group. Current investors own 30% and Chinese owners It’s under 20%, two people on the issue said. Private equity giants like Blackstone and Silver Lake were acquiring stakes in new entities along with venture capital firm Andreessen Horowitz.

The proposal is described in a long, detailed document aimed at investors, said three people with knowledge of the issue.

The two involved in the deal said there was more work to do. Certain potential new investors considered any transaction conditional and were subject to due diligence associated with large-scale transactions, they said.

China has always been a wild card to some extent. Before the president’s announcement on tariffs last week, Baitedan believed that Beijing was happy that he was together in Washington, and the two people are familiar with the issue. However, even before the tariff announcement, there was no guarantee that Beijing would provide informal blessings or formal approval.

Discussions about Tiktok can become even more complicated as the trade war between the two countries escalates. China launched retaliatory tariffs after Trump’s announcement, urging the president on Monday to warn the country on an additional 50% tariff if it persists.

Trump has repeatedly proposed considering lowering China’s tariffs in exchange for approval of the Tiktok deal.

Using tariffs for negotiations is “like a truly amazing effort to force foreign companies to sell,” Chander said.

However, the trade war could still be ongoing in June, he said.

Tiktok is part of it and keeps it unsold for most of the year.

On Friday, ByteDance confirmed for the first time that he was involved in negotiations with the US government regarding the future of the app, but ultimately there was no decision in the hands of other parties.

“There are important issues that need to be resolved,” a bytedance spokesman told reporters in an email. “The contract is subject to approval under Chinese law.”

Maggie Haberman contributed to the report from Washington.

Source: www.nytimes.com

The impact of tariffs on digital commerce businesses

Posted on April 5, 2025 by Igor Mitreski

This year was supposed to be a banner moment for digital commerce companies.

Digital payment giant Klarna was preparing for the first public offer. So did the financial services company Chime. StubHub, an online ticketing business, has been talking to bankers for months about their pursuit of an IPO.

But after President Trump announced the tariff barrage this week, businesses in the industry were rushing to deal with fallout.

Among other moves, Klarna, Chime and Stubhub are all aiming to suspend their IPO plans and wait for market volatility, people with knowledge of the issue said. Additionally, companies that provide payment processing services to online merchants such as Shopify are calling for changes to Trump’s customs policy and are advising customers on how to survive potential financial difficulties. Stripe, payment startups, and Block, a payment and remittance service company previously known as Square, is in a similar move.

It may seem counterintuitive that tariffs bring pain to digital commerce companies. However, these businesses are set up to be affected in a roundabout way.

Retailers like Amazon, which act as clearing houses for online merchants, can feel the impact when fewer people buy foreign exports on their platforms. Companies like Klarna benefit from the fees that charge small businesses for processing digital payments.

“If this chicken game continues until 2025 and continues for longer, this will be extremely painful for the retail industry as a whole,” said Shut Alitakodali, an analyst at Forester, which covers retail and e-commerce. “That would be bad for everyone.”

On Wednesday, Trump said tariffs would reverse decades of what he called unfair treatment in other parts of the world, bringing factories and jobs back to the United States. “The market will be booming,” he said, “the country will be booming.”

However, tariffs are far more wide and more severe than expected, and many tech companies quickly began to feel pain. Apple, Oracle and Dell have global supply chains that are likely to be destroyed by tariffs, but were the most obvious candidates facing fallout.

Digital-first companies dealing in online sales can lose just as much. For example, Meta and Google have been pressured by the threat of bringing back companies, particularly Chinese companies, to buy e-commerce ads on their platforms.

Amazon, the largest e-commerce company, has slid over 9% of its stake in the millions of third-party sellers who ship goods from China (one of the countries that was hit hardest by Trump’s tariffs) since the tariffs have been announced.

TD Cowen analyst John Blackledge has lowered Amazon revenue, operating profit and estimates of 3% to 4% during 2020, particularly as Trump’s “worse than expected” tariffs hurt the company’s market.

Some digital commerce companies could survive the chaos. StubHub, which sells tickets to live events, bounced back after the recession during Covid Pandemic and the 2008 financial crisis. Additionally, Chime customers who provide digital services such as mobile banking apps and checking accounts tend to use their products to buy items such as gasoline and groceries that are usually not sensitive to economic fluctuations.

But Shopify, Klarna and Stripe are all vulnerable to Trump’s tariffs. Payment processing platforms like Stripe tend to be trending due to the global economy and the strength of online shopping. If a large company raises prices due to tariffs, consumers may purchase fewer products online. Additionally, these companies earn a large portion of their revenue from commissions to process sellers’ sales, so lower sales volumes can affect all businesses.

Klarna, Stubhub, Chime and Stripe declined to comment. For more information about Klarna, Stubhub and Chime’s IPO plans, see Wall Street Journal and axios.

A Shopify spokesperson pointed to a recent blog post advising sellers on how to navigate a choppy environment if tariffs hinder their business.

“Without small business protection, legitimate entrepreneurs suffer under policies aimed at curbing exploitation,” the company said. In a blog post. “This hiking cost will disrupt supply chains and hinder trade across borders.”

The company said it supported Trump to address several loopholes in the tariff system. This includes the “de minimis exemption,” in which businesses exempt customs duties on exports to the United States of less than $800.

However, they warned against overdone policies. “Dealing with this abuse is justified, but small businesses cannot be a secondary damage,” Shopify says.

Michael J. de la Mercedo Reports of contributions.

Source: www.nytimes.com

The implications of Trump’s tariffs on the economy

Posted on April 4, 2025 by Igor Mitreski

President Trump’s announcement this week about eliminating tariffs has caused concern for some major tech companies. Apple, Dell, Oracle, and Hewlett-Packard have seen a decline in stocks due to their reliance on hardware and global supply chains affected by tariffs. Surprisingly, the company that owns Facebook, Instagram, and WhatsApp also experienced a drop in stock prices, despite not being directly related to hardware.

Shares in Meta fell by 9% on Thursday, from $52 to $531.62, showing vulnerability to trade behaviors similar to other tech companies. The reasons behind Meta’s decline may be more complex, but it is evident that social networking and metaverse companies are equally susceptible to trade policies as their Silicon Valley counterparts.

Meta’s Exposure to Tariffs and Its Impact on Advertising Business

Meta’s main business revolves around digital advertising, generating billions in revenue by selling ads on Facebook and Instagram. While large brands invest in brand recognition campaigns, the majority of Meta’s advertisers are small businesses engaged in direct response advertising.

The impact of tariffs on Meta’s advertising business is significant, as many advertisers come from different parts of the world. Trump’s tariffs make selling products to US customers costly, potentially reducing overall purchases and leading to a decline in advertising spending on Facebook and Instagram.

Meta’s complex factors, such as revenue from Chinese companies and dependence on e-commerce transactions, make it more susceptible to trade impacts. Chinese businesses affected by tariffs may reduce their ad spending on Facebook and Instagram, impacting Meta’s revenue.

The elimination of the “de Minimis exemption” further complicates the situation for Chinese e-commerce companies like Temu and Shein, potentially leading to a drop in advertising on Meta’s platforms.

The impact of tariffs on Meta’s revenue from Chinese advertisers could be substantial if these businesses reduce their ad spending on Facebook and Instagram. Meta’s exposure to fluctuations in Chinese spending poses a significant risk to its advertising revenue.

While Meta may have a diversified advertiser base, the overall impact of tariffs on Chinese ad buyers could affect its revenue streams beyond just specific companies like Temu and Shein.

Meta’s response to these challenges and the potential impact on its revenue remains to be seen. Other ecommerce and advertising tech companies like Shopify, Google, and Amazon could also face obstacles in global trade.

Investors will be closely watching Meta’s quarterly revenue report later this month to gauge the company’s resilience amidst trade uncertainties.

Source: www.nytimes.com

Trump may consider imposing tariffs on foreign-made prescription drugs next

Posted on April 4, 2025 by Igor Mitreski

There is a higher likelihood of newer and more expensive medicines being produced in the US or Europe, with Ireland emerging as a hub due to its tax benefits.

Many major pharmaceutical products, such as Merck’s keytruda, Eli Lilly’s Zepbound, and Johnson & Johnson’s Stellara, are at least partially manufactured in Ireland.

President Trump acknowledged Ireland’s significance in the pharmaceutical industry during a meeting with Prime Minister Michael Martin in March.

Why did American drug manufacturing move overseas?

US drug production peaked in 2006, coinciding with the loss of patent protection for several top-selling American drugs and the rise of generic manufacturers in India and China. The phasing out of incentives for manufacturing in Puerto Rico led to the shift of production overseas, particularly to countries like Ireland offering tax benefits.

In 2021, most major generic drugs, antibiotics, and antivirals in the US rely on active ingredients produced outside the country, posing a potential risk to domestic drug supply.

President Trump expressed concern about the US’s reliance on foreign sources for essential medicines like antibiotics.

One example is the production of amoxicillin, a common antibiotic, which is predominantly located in China, India, and Europe, highlighting the vulnerability of US drug supply chains.

Has drugs been previously affected by tariffs?

While drugs are typically exempt from tariffs under global trade agreements, recent tariffs imposed by Trump on Chinese imports have impacted drug manufacturers importing active ingredients from China to the US.

The additional costs of tariffs could potentially lead to drug shortages, particularly for generic drugs with slim profit margins, prompting manufacturers to consider exiting the market.

Will tariffs lead to drug shortages?

Tariffs on active ingredients from China may exacerbate existing drug shortages, especially for generic injectables that are more challenging and less profitable to produce compared to new drugs.

Concerns have been raised about the impact of tariffs on drug supply chains, particularly for essential medications like lidocaine, where most active ingredients are sourced from India.

Source: www.nytimes.com

The potential impact of Trump’s tariffs on the US battery boom

Posted on April 4, 2025 by Igor Mitreski

President Trump’s recent tariffs may impact the use of grid batteries in the US energy sector. These batteries are crucial for storing excess wind and solar energy to enhance the electric grid’s reliability. Grid batteries have seen significant growth in states like Texas and Arizona over the past five years, being used to store solar power and reduce reliance on natural gas.

Despite their importance, the majority of US lithium-ion batteries are imported, with a large portion coming from China. With the new tariffs imposed by Trump, grid batteries will face significant taxes when imported from China, potentially hindering their deployment and impacting grid reliability.

Jason Burwen, vice president of policy and strategy at battery developer Gridstor, expressed concerns about the implications of these tariffs on the energy storage deployment, labeling it as detrimental to both business and grid reliability.

The grid battery capacity in the US was projected to reach a record 18,200 megawatts this year, according to the US Energy Information Agency. This growth in battery capacity, along with wind and solar power, was expected to contribute significantly to the grid expansion.

Grid batteries have been instrumental in addressing the intermittency of renewable energy sources like wind and solar power. States like California and Texas have seen an increase in battery installations to mitigate the risk of blackouts during peak demand periods.

Besides supporting renewable energy integration, grid batteries also help stabilize power flow, manage disruptions, and alleviate congestion on transmission lines. The decreasing cost of lithium-ion technology has fueled the installation of grid batteries, paralleling the EV battery trend.

Antoine Vagneur-Jones, head of trade and supply chain at Bloombergnef, highlighted the reliance on Chinese imports for batteries in the US clean energy sector. He warned that the tariffs imposed could have a more significant impact on batteries than other technologies.

The US has taken steps to develop a domestic battery supply chain, but the future remains uncertain due to potential policy changes. While investments have been made in new battery plants under the Biden administration, clean energy policies are facing challenges from Congressional President Trump and Republicans.

Vagneur-Jones noted the complexity of assessing the impact of tariffs on the energy mix, particularly in the competition between batteries and natural gas plants to support renewable energy fluctuations.

Utility companies may find it challenging to increase their reliance on gas due to global supply chain constraints and tariffs affecting the oil and gas industry. While tariffs may benefit fossil fuels, they could hinder clean energy progress, ultimately impacting energy solutions for all.

Source: www.nytimes.com

Taiwan remains cautious as Trump’s tariffs exclude tips

Posted on April 3, 2025 by Igor Mitreski

Taiwan, the heart of the global supply chain for computer chips, woke up to news on Thursday that President Trump had placed a new 32% tariff on the island’s exports to the US. Excluding semiconductors.

The decision not to impose tariffs on the chip sector does not mean they will not come to Taiwan or anywhere else, including South Korea, another major source of tipping.

Taiwanese companies have spent billions of dollars over decades building networks of factories that carry out the complex processes of etching small circuits into silicon.

These chips, and the wide range of electronic devices that include them, are Taiwan’s major exports. And they are increasingly becoming the focus of Taiwan-US geopolitical ties, and have undergone significant changes in trading since Trump took office.

Trump has previously said that Taiwan has gained unfair control in building semiconductors and threatened to impose tariffs on the sector. He also denounces Taiwan, which relies on the US for political support for China’s claim that Taiwan is part of its territory and is too little to its own secure.

Taiwanese officials and businesses are rushing to ease the blow of Washington’s tariff threat. Last month, President Lai Qingte said that Taiwan is interested in purchasing natural gas from its long-term projects in Alaska.

A few weeks ago, the Taiwanese semiconductor manufacturer, the world’s largest chip maker, said it would spend $100 billion in the US to expand its operations in Arizona. TSMC announced plans for the factory during Trump’s first term and received great financial support under former President Joseph R. Biden.

When he announced the tariffs in Taiwan on Wednesday, Trump praised TSMC for his investment in the US. He and his aides hope that South Korean giants Samsung and SK Hynix and other chip companies that have pledged to invest in US businesses during the Biden administration, like Taiwan’s global wafer, will pledge to spend more.

Semiconductors are a complex target for tariffs as the supply chain for creating them is global and highly specialized. Most advanced chips are manufactured in Taiwan, but many are sent to other countries, such as Malaysia, for testing. Second, you can place the chips on an iPhone or artificial intelligence server in Mexico or China before these devices are sold to people all over the world.

“In reality, very few semiconductors are imported directly to the US. Most are incorporated into the final product,” said Jimmy Goodrich, senior advisor to technical analysis at RAND Corporation.

“It’s much more difficult than saying, “I’m going to slap the tariffs on steel,” added Martin Cholzenpa, a senior fellow at the Peterson Institute for International Economics. ”

Even the chips made by TSMC at its Arizona factory must leave the US to be packaged in other devices before they fall into the hands of American consumers.

“The chips currently made in Arizona will need to leave the US for a while before they can go back,” Ho said. “That’s just a fact of the global chip supply chain now.”

Trump announced 32% tariffs on Taiwanese goods exported to the US on Wednesday, with Taiwan sending nearly a quarter of its exports directly. In addition to non-taxable chips, Taiwan mainly exports electronic devices and components. Taiwan’s US Chamber of Commerce has said that Taiwan plays an integral role in the US economy, urging officials in Washington and Taipei to strengthen relations.

On Thursday, the Taiwanese government accused the tariffs of being unreasonable and unfair to Taiwan. The government will serve as a strong protest against US trade representative Lee Hui-Chy. The Taiwanese Cabinet said in a statement.

Taiwan’s exports to the US have been increasing in recent years, reflecting an increase in demand for Taiwan’s advanced technologies, including electronics and semiconductors, the statement said. President Lai said the Taiwanese government is concerned about the global impact of tariffs.

The Taiwanese government was “too optimistic about its relationship with Trump,” said Jason Huss, a senior fellow at the Hudson Institute and a former member of the Taiwan Congress for the opposition Nationalist Party. “I thought Trump was a bit naive to think it was good for them, especially after the TSMC announcement.”

Chris Buckley I contributed a report from Taipei, Taiwan.

Source: www.nytimes.com

Apple’s global supply chain undergoes strain with Trump’s new tariffs

Posted on April 3, 2025 by Igor Mitreski

In 2018, when President Trump initially implemented tariffs on China, Apple shifted production of iPads and Airpods to India and Vietnam from China. However, with Trump’s return to the White House, this strategy may have backfired for the tech giant.

Trump recently announced tariffs of 46% on Vietnam and 26% on India, which could significantly impact Apple’s business. This is in addition to the existing 20% tariffs on products imported from China, which is where around 90% of iPhones are manufactured.

The proposed tariffs could increase Apple’s costs by $8.5 billion annually, affecting the company’s profits and potentially leading to a 7% decrease in earnings next year.

Apple’s shares dropped 5.7% after Trump’s tariff announcements, signaling concerns for the company’s financial outlook.

Other high-tech companies like Google and Microsoft may also be impacted by these tariffs, affecting businesses beyond Apple. Trump’s broader trade strategy includes imposing tariffs on all countries that tax US exports, further complicating the global trade landscape.

Despite previous efforts by Apple’s CEO Tim Cook to forge a relationship with Trump and avoid tariffs on Apple products, the company now faces significant challenges due to the new tax policies.

After Trump took office, Apple made promises to invest in the United States, but the new tariffs could impact these plans. The company has diversified production beyond China, with moves to India and Vietnam.

Apple’s efforts to expand production in India and Vietnam may face challenges, especially with the recent tariff implications. Despite previous success in avoiding tariffs on certain products, Apple now faces a more complex trade environment.

Apple’s shift in manufacturing to India and Vietnam was aimed at diversifying production and tapping into new markets. However, challenges like skilled labor and supply chain issues have hindered these efforts.

Despite the hurdles faced in US manufacturing, Apple continues to explore opportunities in different countries. The tech giant remains focused on innovation and growth, navigating the ever-changing global trade landscape.

Source: www.nytimes.com

Car sales surge in anticipation of Trump’s tariffs

Posted on April 1, 2025 by Igor Mitreski

The auto industry flocked to dealers last month to lock deals before Trump’s car fares increased by thousands of dollars, witnessing a different kind of March madness, several automakers said.

“This past weekend was the best weekend I’ve seen in a very long time,” Randy Parker, CEO of Hyundai Motor North America, told reporters Tuesday. The company reported a 13% increase in sales in March on Monday compared to the previous year.

Ford Motor said on Monday that sales at dealers rose 19% in March. However, the company said Ford’s sales throughout the quarter reduced 1% to around 500,000 vehicles as sales to fleet customers fell.

General Motors did not provide another figure in March, but reported first quarter sales rose 17% from the previous year to 693,000 vehicles.

Last week, Trump said Thursday he would impose a 25% tariff on imported vehicles. Customs duties will be extended to imported auto parts on May 3rd. Many cars made in US factories contain parts made overseas, frequently exceeding 50% of the vehicle’s value. Analysts estimate that automakers will have to raise prices on some models by more than $10,000 to compensate for new taxes.

GM, Ford and Hyundai reported increased sales of electric vehicles and hybrids. GM said that the electric version of the Equinox Sport Utility Vehicle has become widely available, almost doubled for vehicles with only batteries to 32,000 units. The starting price is around $35,000, and the Equinox is one of the most affordable electric vehicles available in the US.

Ford said sales of hybrid vehicles increased by 33%, while sales of electric vehicles like the Mustang Mach-E rose by 12%. Sales of cars with internal combustion engines fell 5% during the quarter.

Hyundai said sales of the hybrid skyrocketed 68%, while sales of pure electric vehicles rose 3%.

Parker of Hyundai said he could not estimate the impact it would have on its involvement in the company’s price. Hyundai and its sister company Kia have factories in Georgia and Alabama, but import a considerable number of vehicles from South Korea.

“We haven’t made a solid decision yet,” Parker said. But he added, “Don’t wait for tomorrow to buy what you can buy today.”

Source: www.nytimes.com

Car manufacturers faced with costly decisions due to Trump’s tariffs

Posted on March 28, 2025 by Igor Mitreski

President Trump’s new 25% tariffs on imported cars and parts have prompted automakers to consider various responses that come with financial implications, ultimately leading to higher car prices as analysts suggest.

Manufacturers may opt to shift production from countries like Mexico to the US, increase production of existing models made in the US, or cease sales of less profitable imported models. Regardless of the decision, consumers should expect to pay more for both new and used cars, with estimates indicating potential price hikes ranging from $3,000 to over $10,000 depending on the model.

In addition, potential additional tariffs announced by Trump could further impact car prices if implemented, especially in the midst of escalating trade conflicts.

The long-term effects of Trump’s tariffs on the automotive industry are expected to be disruptive and costly for American consumers, as noted by Michael Cusumano, a professor at MIT Sloan Management School.

Trump’s tariff threats, stated as permanent, have rattled automotive executives who hoped for negotiation leverage, leading to challenges in reshaping manufacturing and supply chains to comply with the imposed tariffs.

While Trump envisions tariffs as a strategy to revive American automobile manufacturing, the process of relocating production to the US involves substantial costs and complexities for automakers, potentially impacting prices for consumers.

The uncertainty surrounding tariffs has raised concerns among automakers about making long-term investment decisions, as the potential for policy changes under a new administration looms and could reverse current tariff implications.

While tariffs may incentivize choosing US-based production sites, consumer costs may rise as automakers prioritize compliance over manufacturing efficiency.

Major investment decisions impacted by tariffs could have substantial financial repercussions for companies, with potential risks if tariffs are subject to policy changes in the future.

Automakers may be cautious in passing on tariff costs entirely to consumers, as excessive price hikes could lead to reduced sales and revenue, potentially contributing to economic downturns.

In response to tariffs, some automakers have already raised prices, highlighting potential price increases for various car models as a result of imposed tariffs.

As the industry grapples with tariff impacts, automakers may explore strategies such as suspending sales of less profitable models and focusing on domestically produced vehicles to navigate the evolving landscape of trade policies.

Despite efforts to minimize tariff effects, most automakers rely on foreign-made parts, causing tariffs to impact overall vehicle costs and potentially leading to price adjustments across different car models.

As automakers navigate the challenges posed by tariffs, market dynamics and consumer responses could shape future decisions regarding production and pricing strategies in response to evolving trade policies.

Source: www.nytimes.com

Trump to Ease Tariffs on China in Exchange for TikTok Deal

Posted on March 27, 2025 by Igor Mitreski

Donald Trump has expressed his willingness to reduce tariffs on Chinese trade in exchange for the sale of Tiktok, a social media app used by 170 million Americans, by its Chinese parent company.

He acknowledged China’s involvement in any agreement, stating, “China will have to play a role in it, perhaps giving approval, I believe they will.” Trump mentioned the possibility of offering China a concession to facilitate the deal.

Trump’s remarks indicate that the sale of Tiktok is a priority for his administration and that tariffs are being used as a negotiation tool with Beijing.

Tiktok did not provide an immediate response to the situation.

Bytedance, the parent company of Tiktok, faces an April 5 deadline to find non-Chinese buyers for the app or risk a US ban on national security grounds that was established in January under the 2024 law.

Washington’s concerns about Chinese ownership of Tiktok have led to the current situation, with fears that Beijing could exploit the app for malicious purposes and gather data on Americans.

Recently, Trump imposed an additional 20% tariff on all imports from China, demonstrating his administration’s firm stance on trade negotiations.

Securing a deal without Chinese control has been a key focus in finalizing the Tiktok transaction, with tariffs used as leverage in negotiations with Beijing.

In his earlier statements, Trump had warned China that failure to approve US deals with Tiktok could result in further tariffs being imposed.

Vice President JD Vance anticipates that the terms of the agreement regarding Tiktok ownership will be settled by April 5th.

Reports indicate that a White House-led meeting between investors is working towards securing US business interests for video apps, involving major Chinese stakeholders.

The fate of Tiktok, a widely-used app in the US, has been uncertain since the bipartisan decision to sell it by January 19th.

After initial turbulence in January, the app was temporarily banned but resumed operations shortly after Trump’s term began. He subsequently extended the deadline for the sale until April 5th and hinted at the possibility of further extensions.

The intense involvement of the White House in these trade discussions is unprecedented, resembling the role of an investment bank.

Critics argue that the ban on Tiktok infringes on Americans’ freedom of speech by restricting access to foreign media, potentially violating the First Amendment of the US Constitution.

Source: www.theguardian.com

Tesla announces minimum tariffs for Chinese-made cars exported to EU

Posted on August 20, 2024 by Igor Mitreski

The European Commission has updated its extensive investigation into Chinese government subsidies for electric cars. They have announced that Tesla will be subjected to a 9% tax on Chinese-made cars exported to the EU.

The tariffs imposed on Tesla are significantly lower than the average of 21.3% on cooperating companies and 36.3% on non-cooperating companies. These tariffs were applied after Tesla requested individual action as part of the broader EU investigation.

Compared to the 100% tariffs imposed by the US, the 9% EU tariffs are relatively low and will be added on top of the existing 10% tariffs on EVs from China.

EU officials visited Tesla’s Shanghai facility in June and stated that the company has benefitted from low-cost batteries and Chinese government subsidies, including cheap land and export subsidies.

The 9% tariffs are expected to be in effect by October 31st, pending approval from EU member states.

Furthermore, the European Commission announced a slight reduction in tariffs on Chinese-made EVs after discussions with the companies. Under the latest proposal, BYD would face a 17% tariff, Geely 19.3%, and SAIC 36.3%. These tariffs have been revised downwards since the provisional measures were first announced and could change again.

EU officials confirmed that companies will not have to pay provisional tariffs until the deadline, as concluded that European automakers are under a “threat of harm” rather than actual harm like factory closures or job losses.

EU officials emphasized the need for action to prevent the surge in Chinese EV exports from causing significant harm to EU producers. They stated that their laws allow them to act before actual harm occurs in terms of job losses or factory closures.

The Kiel Institute for the World Economy estimated that China’s EV support will reach $5.6 billion by 2022, when direct payments to manufacturers are phased out.

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BYD has been the largest beneficiary, receiving $3.7 billion in support, while Tesla received about $426 million for its Shanghai factory.

According to a report by China trade website Soapbox, 45% of Beijing’s electric car exports between June 2020 and June 2024 were headed to the EU.

Chinese manufacturers ramped up exports in April ahead of expected tariffs, with import registrations of Chinese-made EVs increasing from April to May before declining, as shown by customs data.

Source: www.theguardian.com