Apple's AirPods will not escape Trump's China tariffs

Marco Green
August 14, 2019

The iPhone contributed less than half of Apple's revenue for the first time in seven years during its latest reported fiscal quarter.

The rises are a outcome of the United States' ongoing trade war with China, which produces a large percentage of the world's consumer electronics. Since the iPhone is designed in the US but assembled in China, it is considered an import from that country and is subject to the tariffs.

Apple shares spiked on Tuesday after the U.S. delayed a 10% tariff on certain Chinese imports, including such technology products as cellphones and laptop computers. Investor relief at the cease-fire sent shares of the company up more than 4% on the day, which benchmark stock indexes also jumped. They had been scheduled to take effect September 1. This tier of products includes smartphones like the Apple iPhone, and other consumer electronics goods shipped to the states from China.

Tariffs are paid by US importers, not China, as Mr. Trump has repeatedly claimed. Investors were nervous that retailers like Apple would pass the added cost of their Chinese-made products on to consumers, potentially dampening sales for both the important "back to school" and holiday shopping seasons. In a statement issued past year, Apple said, "It is hard to see how tariffs that hurt U.S. companies and USA consumers will advance the government's objectives with respect to China's technology policies".

"The overall China tariff/demand situation represents a $20-$25 overhang on Apple shares and will remain a lingering cloud over the story in the near-term", Ives wrote in a note published on 13 August, prior to the news about the tariff delay. Apple already picks up the cost of tariffs imposed on certain iPhone and iPad cases imported from China in order to keep the retail price the same.

Most analysts expect an incremental upgrade to the iPhone next month, with bigger leaps in technology not coming until 2020, according to CNET. Apple is reportedly now looking into moving its manufacturing out of the country in response to the increases. But that's easier said than done.

Other reports by Click Lancashire

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