President Trump’s 10% tariff will not impact Apple iPhone, iPad, and MacBook end-user prices as per Analyst Kuo Ming Chi of TFI Securities. Moving production out of China to India and Vietnam among ‘smart moves’ by Apple to avoid price hike.
Allaying general fears of prices moving up due to 10% tariffs imposition from September 1, 2019, Kuo said that Apple had prepared well to absorb any rise on two counts:
One; reasonable anticipation of political moves by China and the US administrations and two; reducing dependence over China by moving out production of iPhones and iPods to India and Vietnam and other countries, as informed earlier.
Trade War Fears May Ring in Higher End User Prices for Apple Products
As the trade war looms, punitive tariffs being played out between the US and China are anticipated to disrupt Apple’s and other US entities’ supply chain, and bloat production costs.
This is always a worry for any US producer of global products; be it Apple, or any major brand, or retailers.
Kuo says Apple with its ‘smart moves’ can at least wade off the consequent consumer price increases immediately through above well-anticipated steps.
According to Appleinsider, Kuo believes that non-Chinese iPhone, iPad, and Apple Watch manufacturing could meet US market demand by 2020. The Mac is a different matter, with production outside of China not expected to meet US demand until 2021.
On tariff rise, Cook has said,
“I’m hoping that (tariff rise) doesn’t happen. And I don’t anticipate it happening. I know people think the iPhone is made in China. The iPhone is assembled in China. The truth is, the iPhone is made everywhere. It’s made everywhere. And so a tariff on the iPhone would hurt all of those countries, but the one that would be hurt the most is this one.”
Below is a table indicating sourcing of Apple products from locations other than China for your understanding:
Apple May Just Workout to Keep Prices Under Tab Through ‘Smart Moves.’
This luckily did not happen. Now, it may not be misplaced to quote industry insiders regarding the impending hike in consumer end pricing of iPhones and other products, even though Apple may have counter-arguments based on the above assumptions.
Cook has also stated in his earnings call recently, that besides China, the US, Japan, Korea, European Union, and other countries Apple has production facilities. All contribute to the supply chain and can be considered responsible for negating the effects of such repressive tariffs.
On tariffs, neither the Administration nor Apple Inc has much to worry as costs are incorporated finally in the consumer pricing of the products like iPhones, iPads, iPods, MacBook (even though produced majorly from the USA), iPods, etc.
But yes, if volumes of the products go down, then there’s a worry for Apple or any other company dealing in such goods that face tariffs.
So ‘smart planned moves’ by Apple will help pin down its product pricing in the face of impending tariffs. What do you say?