Apple may stop making products in China

Tim Cook em evento da Apple com a bandeira da China ao fundo

THE trade war between the United States and China may have had a temporary truce when Donald Trump last week announced the momentary suspension of tariff increases for products imported from Wall Country – something that should have made Apple executives breathe a sigh of relief in Cupertino. However, things are far from a resolution, as the Bloomberg.

According to sources close to the company’s plans heard by the report, Apple and its suppliers may come to consider a leaving China in case the import tariffs for products coming from the country reach 25%. As is well known, Trump has constantly threatened to raise taxes on goods manufactured and imported from China, but if the new tariff is implemented, it is believed to stay in the 10% range; 25% would be an extreme, more punitive measure by the American president.

The fact is that a good part of Apple’s partners concentrate their production precisely in China and a complete move to other countries would be a Herculean operation. Still, companies (like Foxconn, Hon Hai and Pegatron) are basically submissive to the plans of Apple, their main source of profit, and must follow in the Cupertino giant’s footsteps wherever it goes. One of the suppliers, even, would have already indicated alternative countries for the production of devices other than the iPhone.

Obviously, Apple hopes that such action is not necessary – the very source heard by Bloomberg stated that there is no reason for the change for now. Still, if Trump decides to go heavy on tariffs, leaving China is no longer a distant thought but a concrete plan.

No wonder: according to estimates by RBC analyst Amit Daryanani, if Trump raises tariffs on products imported from China by 10%, Apple will lose about $ 1 in earnings per share (in the scenario where all the company’s products are subject to the new rate and Apple itself absorbs the costs, ie). If taxes rise 25%, however, that loss rises to $ 2.50 – that is, a figure that is difficult to manage even for one of the most powerful companies in the world.

Let’s see how this case will unfold …

via TechCrunch