When Donald Trump announced last December that he would suspend the three-month price increase for Chinese-made products traded in the United States, Apple breathed a sigh of relief: it seemed to be the beginning of a possible cooling in the trade war between the two largest powers in world. Good it seemed.
As reported by The verge, the US government raised import duties on certain categories of products made in China: from the 10% set last September, the tariff jumped to 25%. Some Apple products get into the cake specifically. cables, chargers, covers and cases.
When the tariff was set at 10% last September, Apple absorbed the extra costs and did not pass on the increase to the consumer; Now, with another significant tax hike, the question is whether the company will continue to assimilate the tariff or increase the price of accessories. Certainly Ma's profit margins give her a good time not to mess up product prices; On the other hand, the drop in margin should have some impact on the company's finances, so we will have to wait and see.
iPhones on the straight
The trickiest part of this story is that, as the US-China trade war has rekindled, the future is uncertain even for other product categories and therefore for Apple's main lines.
The Eastern country has already retaliated against Washington's rise by also announcing a series of new rates for US-imported goods such as natural gas, petrochemicals, and soy or peanut oil. Trump, in turn, signaled that in order to extend the tariff increase to other de facto segments, the US Trade Office has already begun an approval process to apply 25% rates to more categories of goods, such as smartphones (yes, including iPhones). The new taxes could take effect as early as June, should the president change his mind.
According to analysts heard by CNBCIf the rate increase actually hits the iPhone, the average selling price of the device could rise 14%. Speaking specifically of the iPhone XS, the current $ 999 would jump to $ 1,142if Apple wanted to continue selling everything at the same profit margin and without negotiating with suppliers.
Of course, Trump's move looks more like a bargaining chip than anything else, the government is unlikely to raise the tariff on such a wide range of products in such a short time. Still, the signal must be yellow on a certain “Cupertinian spaceship”.
Due to the uncertainty that has engulfed the market following the news surrounding the trade war, Apple shares have suffered a significant shake-up over the past few days. At present, $ AAPL is worth about $ 189 on NASDAQ, a significant drop from May 1, when it reached $ 211. At present, the company's market value is around $ 870 billion.
It is not only Apple that is in bad shape, however:
wowie woo pic.twitter/mJKlPYNjam
– rat king (@MikeIsaac) May 13, 2019
That is not only Cupertino, but the entire Silicon Valley, the US and the world are watching to see what are the next actions of Donald Trump and his class on one side, and Xi Jinping and his companions on the other.