Apple iPhone, iPad costs aren’t likely to increase after US tariff on China imports.President Donald Trump announced a 10 per cent tariffs on $300 billion of Chinese imports, effective September 1, 2019, in retaliation for moves by the Chinese government. At the moment, it is unclear if Apple products will come under the tariffs but if they do, Apple will not increase the prices of any of its products including iPhones, thanks to “proper preparations” made by the tech giant, noted Apple analyst Ming-Chi Kuo.
Kuo believes that Apple will absorb most of the additional costs due to tariffs in the mid-short term, reported MacRumours. In his note, the analyst says that there will be a negative impact on Apple’s profits from its hardware business (including iPhone, iPad, MacBook, Apple Watch and AirPods), but the company will reap benefits in its brand image and relationships with suppliers.
“We also believe that the negative impact on Apple is limited and temporary because the profit from service business is growing, and non-Chinese production locations will gradually increase,” Kuo added.
As per the report, the analyst also talked about Apple’s ongoing plans about increasing its non-Chinese production. The company has been expanding production in India and Vietnam as part of a strategy to diversify product manufacturing beyond China.
To avoid the extra tariffs, Apple will be working towards boosting its non-Chinese production, thus dealing with the demand enforced by the US market. Kuo thinks Apple’s non-Chinese production locations could meet most of the demand from the US market after two years.
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Specifically, Kuo believes iPhone, iPad, and Apple Watch manufacturing could meet demand as early as next year, but adequate Mac production outside of China won’t be achieved before 2021. Earlier last month, Apple asked for a US import tariff exemption on parts for the new Mac Pro, which President Trump said would be denied.
