China tariffs may not make iPhones more expensive for customers | Cult of Mac

China tariffs may not make iPhones more expensive for customers


iPhone XS Max
Ming-Chi Kuo thinks Apple will absorb the cost of increased import duties.
Photo: Ed Hardy/Cult of Mac

Don’t panic: the introduction of new import tariffs by President Trump isn’t going to make the next iPhone even more expensive!

That’s the message from reliable Apple analyst Ming-Chi Kuo. In his latest note to client, Kuo says that he thinks Apple will absorb the cost of any tariffs, rather than pass them on to customers.

Kuo writes that he thinks, “the tariff may not impact the prices of Apple’s hardware products” in the United States. As a result, he is confident that, “prices of hardware products and shipment forecasts for the U.S. market will remain unchanged.”

This comes after President Trump slapped new tariffs on products imported from China. Starting September, the U.S. will charge a 10% tax on imported electronics, including the iPhone, iPad, AirPods and more. In all, $300 billion dollars worth of imports will be affected.

The cost of tariffs

The big question with these tariffs, as far as Apple is concerned, is whether these costs get swallowed up by Apple or passed onto customers. A number of analysts have suggested that they could result in Apple ramping up the price of the iPhone.

HSBC previously said that the cost of an iPhone could increase by $160 in the event of tariffs. J.P. Morgan, meanwhile, also suggested that tariffs could increase prices by around 14% or more.

Apple has been steadily increasing the price of the iPhone in recent years. This has happened as the smartphone business has started to slow down. In place of massive growth in numbers, Apple has instead focused on increasing the price of individual handset models.

It’s unlikely that Apple would be willing to keep swallowing the cost of tariffs, however. News of the tariffs has already caused Apple’s share price to fall. Ming-Chi Kuo says that he thinks non-China manufacturing will increase. This is something we’ve already seen with Apple moving some of its production to India.

Kuo breaks down a number of different products currently made in China. These include the iPhone, iPad, Mac, Apple Watch, and AirPods. He believes all U.S.-bound products in the categories could be produced outside China between 2020 and 2021.

Via: 9to5Mac