The tariff increment from 10% to 25% on Chinese imports is about to increase the price of iPhones.
The 200 billion USD raised against the duties on imports from China would directly affect the rates of Apple’s products. The trade dispute would add about 160 USD to the cost of Chinese made iPhone XS, which starts at 999 USD.
If the US government decides to raise duties on the remaining 300 billion USD Chinese goods,
Apple may need to raise iPhone prices significantly to offset the higher costs of parts.
Shifting the manufacturing of phones to the US would cause approximately 20% rise in prices according to the Bank of America. The following raise would lead to huge loses in demand. Whereas orders to North America have already dropped by 19% in the past three months.
If Apple decides to shield its customers and adjust the cost of tariffs against its earnings, the bank estimates a total iPhone gross margin may decrease by 4%.
Moreover, the US supreme court on Monday allowed a major antitrust class action to move forward, as Apple being accused of raising app prices by use of monopoly.
Following the concerns over the trade dispute, shares of the company are down close to 6% to 186 USD, the sharpest decline in its share price since 2013. Apple stock is down 11% since the start of the month.
Apple’s chief executive, Tim Cook, has tried publicly to play down tensions, describing the US-China trade relationship as “big and complex” and one that required “a level of focus and a level of updating and modernization”.