Apple's AirPods will not escape Trump's China tariffs

WASHINGTON and SAN FRANCISCO (Reuters) - Apple Inc's AAPL.O AirPods, Apple Watch and HomePod, which have helped the company to offset waning sales of its bestselling iPhone this year, are not included in a temporary reprieve on tariffs by the Trump administration and will face a 10% levy on Sept 1.

FILE PHOTO: Apple AirPods are displayed during a media event in San Francisco, California, U.S. September 7, 2016. REUTERS/Beck Diefenbach/File Photo

The administration said on Tuesday some major items, such as laptops and cellphones including Apple’s MacBooks and iPhones, will not face tariffs until Dec. 15. The delay affecting some of Apple’s biggest-selling products helped send its shares up about 4% in early afternoon trading.

Apple did not immediately respond to a request for comment.

Items that face tariffs on Sept. 1 include consumer electronics such as smart watches, fitness trackers, smart speakers and Bluetooth headphones. These were spared from tariffs last year after the manufacturers sent comment letters to the government. Some accessories have been central to Apple’s efforts to diversify revenue beyond its signature iPhone, which pushed the company’s market capitalization past $1 trillion in 2018 but has gone into decline this year.

The iPhone contributed less than half of Apple’s revenue for the first time in seven years during its latest reported fiscal quarter. The iPhone’s decline was offset by a 50% jump in sales of so-called wearables, such as the Apple Watch and AirPods, helping Apple beat Wall Street estimates and boosting its stock.

In July, Apple Chief Executive Tim Cook said wearables helped Apple sales in China, where iPhone sales have struggled. During the last quarter, the iPhone’s market share in China declined to 5.8% from 6.4%, according to market research firm Canalys, in part because smartphone rival Huawei Technologies Co Ltd gained market share to become the country’s top handset seller.

“We actually grew in mainland China,” Cook told Reuters in an interview on July 30. “Non-iPhone revenue grew 17%. We grew in every category outside of iPhone.”

According to lists published by the U.S. Trade Representative’s office, a broad category of items taken off a $200 billion tariff list last year will be subject to a 10% tariff as of Sept. 1.

These include popular products from Apple rivals, such as Fitbit FIT.N smart watches, smart speakers from Inc's AMZN.O and Alphabet Inc's Google GOOG.O, and Bluetooth connected devices.

Fitbit, Amazon and Google did not immediately return requests for comment.

Reporting by David Lawder in Washington and Stephen Nellis in San Francisco; Editing by Chizu Nomiyama and Richard Chang