Apple is already paying 30 percent duties on some of its products. However, tariffs are anticipated to take effect on Dec. 15. This could force the Cupertino tech titan to pass additional costs directly to iPhone buyers, says Wedbush analyst Daniel Ives.
Apple's flagship product, the iPhones, is the next target in the current trade war. A 15 percent tariff is looming on the horizon, threatening to affect the prices of Apple smartphones, laptop, and several other electronic products manufactured in China. The Cupertino tech giant already took the hit for tariffs impacting Apple Watch, AirPods, and iMac products.
However, absorbing the duties anticipated to take effect on Sunday could have a major impact on the company's future gains. If Apple keeps the prices of its products steady following the Dec. 15 tariffs take hold, it will lower the earning per share of the company by approximately 4 percent, says Ives. If the company passes the tariffs to consumers, it could harm the performance of the Cupertino tech giant as it embarks in a new decade.
This move could spike the prices of iPhones ranging between $120 and $150. As a result, it would decrease the demand for the flagship smartphones of the company between 6 and 8 percent, the analyst shares to Market Insider in a phone interview. If the tariff does not see a truce, Apple, among other companies, has the most to lose, Ives claims.
The Wedbush analyst is expecting that the Cupertino tech giant would absorb the hit to prevent slowing down sales momentum prior to a crucial iPhone upgrade cycle. Apple is anticipated to unveil its first-ever handset series with 5G connectivity support in the fall of 2020. But, there is a chance that Apple could win tariff exemptions from the US government, preventing the price increase altogether.
NYT: WH trade adviser Peter Navarro has revived his alter-ego "Ron Vara," an anagram of his name he's previously acknowledged quoting as an "inside joke" in books, to bolster his case that the US should proceed with a new round of tariffs on Chinese goods https://t.co/JsPa05Aa2X — CNN (@CNN) December 12, 2019
It is worth noting that the Cupertino tech juggernaut has already won waivers for the Mac Pro, with a promise to assemble the premium desktop in the US. Apple CEO Tim Cook has been working really hard to gain favor from the Trump administration before the Dec. 15 deadline. He recently gave the US President a tour at the Texas Apple factory.
.@realdonaldtrump said that China and the US are getting "very close" to a deal, but this could just be another trick to boost stock markets. China wants to see real actions not just words to show sincerity such as rolling back tariffs: Mei Xinyu, an expert close to the MOFCOM. pic.twitter.com/vXvJFkAi6W — The Business Source (@GlobalTimesBiz) December 12, 2019
During the visit, US President Donald Trump said he was looking into whether the Cupertino tech giant should be given an exemption for the additional tariffs.
