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Home / Apple / From the editor's desk: Will tariffs increase the price of iPhones by $ 100?

From the editor's desk: Will tariffs increase the price of iPhones by $ 100?



Last week, President Trump sent out a tweet threatening an additional 1

0% tariff on goods imported from China. Products that include technology. Apple's shares fell 2% that day and wiped out previous gains the company had after the Q3 earnings call Tuesday. The news has caused some rubbish as to whether the 10% tariff will affect how much we as consumers pay for iPhones in the future. I've spent some time reading up on what tariffs are, what they are for, and who they're affecting, and I've listened to what analysts predict Apple can do if the 10% tariff comes into effect (and Apple doesn't grant a waiver). What I've come up with is … it's complicated.

First, tariffs on imported goods, as Trump threatens, are taxes that the country receiving the goods must pay. I'm certainly not qualified to talk about the deeper purposes, causes and effects of tariffs, but to learn more, Investors.com has written a very clear, simple understanding of tariffs, including some historical relevance. Specifically related to Apple, however, it means a 10% fee on what Apple pays in factories in China to mount iPhones and other products. However, that does not mean that Apple will be taxed on the consumer's retail price on an iPhone. Tariffs are based on wholesale cost of goods.

In 2012, China Daily reported on a research report written by three US professors on the global economy. In this report, the researchers note that iPhone production is global. It is the most assembly that takes place in China.

They (people who think China's role is greater in the production of Apple products) focus only on the trade deficit with China, which is why they believe China has a bigger role. What they don't understand is that China gets all kinds of input from other countries from Japan, the United States, Malaysia and so on. So China's contribution is really a small amount of manpower, said one of the report's authors, Professor of Kenneth L. Kraemer, University of California.

They think China's role is greater simply because they do not understand how global supply chains work. They believe everything from an iPad and iPhone is made in China rather than just being shipped (components) and mounted there, Kraemer said.

Lifewire has listed some (but definitely not all) parts of an iPhone produced around the world, and further hit the point that Apple CEO Tim Cook made during the third quarter revenue collection last Tuesday.

There is a substantial level of content from the United States, and much from Japan to Korea to China, and the EU is also contributing a fair amount. And then. That is the nature of a global supply chain. I think, to a large extent, I think it will carry the day in the future as well.

Some analysts predict that Apple will diversify the iPhone, which would not be a simple feat, but will cost less for Apple, in the end. Others, like Morgan Stanley analyst Katy Huberty, think differently.

… given the dependence on China's established, low labor and manufacturing / tool expertise, a large-scale relocation out of the country would not only be costly but could take several years to complete, potentially increasing the odds of execution risk, after our view, "Huberty wrote in a note to investors.

I think Cook's remark at the investor meeting suggests that the company is willing to take that risk.

Does this mean that the next iPhone will be $ 100 more expensive to offset the rate "I don't think so. I think Apple will use its global influence to its advantage and ensure production continues without Whether the price of the iPhone increases in 2020 may be another story, but I don't think it will have anything to do with the trade war." 12 is known to have 5G, 3D cameras and USB-C, which may be a little more expensive to manufacture but not mountable.

What are your thoughts on potential tariffs for the latest list of Chinese imports to the United States? Do you think Apple will start charging $ 100 more for the iPhone to bring in any cost increase? If not $ 100, how much?

Lory


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