How the U.S.-China trade war could hike Apple iPhone prices

“It’s been a week since the Trump administration raised tariffs from 10 percent to 25 percent on $200 billion worth of Chinese exports, and tech companies are still grappling with the consequences,” Klint Finley writes for Wired. “The existing tariffs cover a wide range of goods, but few finished consumer electronics. The next round could include laptops and smartphones, referred to as ‘automatic data processing machines’ in the government’s proposal. But even if finished electronics get a pass, existing tariffs on computer components such as power supplies and printed circuit boards could increase costs for consumers.”

“It’s still possible that the US and China could work out a deal that largely preserves the status quo. But Brian Keare, an executive at business analytics company Incorta, says the failure to reach a deal last week led to a growing fear among the companies he works with that the tariffs could continue for years,” Finley writes. “It’s too early to say how drastic the results of the conflict will be. Keare says companies he works with are still assessing the impacts of the increased tariffs on their businesses. ‘It quickly morphs into questions about absorbing the tariffs versus passing the prices on to customers,’ he says.”

“Analysts at JP Morgan estimate that Apple would need to increase the cost of iPhones by 14 percent to make up for the tariffs, though it could also opt to absorb some of the costs, at least for now,” Finley writes. “Companies are eyeing new places to do business. Supplier contracts and manufacturing that might otherwise have gone to Chinese companies are going to companies in India, Thailand, and Vietnam… The result might be a gradual disentanglement of [the U.S.’s and China’s] economies.”

Read more in the full article here.

MacDailyNews Take: Again, balance will come, perhaps sooner than many think.

I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018

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