President Donald Trump’s tentative trade deal with China, announced earlier today, has saved Apple from raising the prices, or eating those price hikes itself, of some of its most popular products, including the iPhone.
According to Bloomberg, which cites Wedbush Securities analyst Dan Ives, Apple’s top iPhone models could have been hit with a 15 percent tariff, which equates to a bump in price of around $150 for the base model iPhone 11 Pro, if the trade deal had not been reached. The tariffs were set to go into effect on December 15th and would have impacted the iPhone, the iPad, and the MacBook line, among other products.
“Trump delivered an early Christmas present to Apple,” Ives said in a note to investors obtained by Bloomberg. “If this tariff went through it would have been a major gut punch for semi players/Apple and could have thrown a major wrench into the supply chain and demand for the holiday season.” Apple declined to comment.
The US-China trade war, which Trump has been waging since his first few months in office in the spring of 2017, has been escalating in dramatic fashion this past year, roping in scores of products from American companies that primarily manufacture in Chinese factories. Apple has been perhaps the most high-profile of the affected companies, considering the massive scope of its operations in China and Apple’s strong ties to Beijing.
Although Apple has been developing contingency strategies to move manufacturing to other markets, like India and Vietnam, CEO Tim Cook has repeatedly lobbied Trump to either exempt Apple products from new tariffs or to reach a deal, like today’s, that would put an end to the escalation. Trump has at times publicly denied Apple’s requests related to certain products and components (although his administration has granted Apple others), and in September the company was hit with another round of 25 percent tariffs on parts related to the manufacturing of its new Mac Pro computer, after the US Trade Representative’s office denied another of the company’s exemption requests.
Apple is also bearing the brunt of tariffs on the Apple Watch, AirPods, its iMac desktop, and the HomePod speaker, Bloomberg reports. But those may be rolled back as part of the tentative trade deal. So far, Apple has not raised prices on any of its products due to the trade war. But analysts assume that either doing so or eating the cost any further, especially after the new round that was set to go into effect on Sunday, would have a noticeable negative impact on its profits.