Apple likely to absorb added cost of tariffs, avoiding iPhone, iPad, and Mac price increases
Ming-Chi Kuo, one of the world’s most highly cited Apple analysts has published a new research note in which he shares his predictions on how President Trump’s latest round of import tariffs may effect Apple’s operations, sharing that he expects Apple to absorb any added costs to avoid iPhone, iPad, and Mac price increases.
Kuo says Apple has likely made “proper preparations” for such a tariff, and he predicts that Apple will “absorb most of the additional costs” in the mid-short term.
Although the move would impact negatively on Apple’s hardware profits, Kuo says Apple will reap benefits in its brand image and relationships with suppliers.
In the mid-short term, if Apple absorbs most of the additional costs due to tariffs, there will be a negative impact on its profits from its hardware business, but the company will reap benefits in its brand image and relationships with suppliers. We also believe that the negative impact on Apple are limited and temporary because the profit from service business is growing, and non-Chinese production locations will gradually increase.
At this point it’s still unclear if Apple’s products will come under the tariffs on toys, games, and consumer electronics, but if they do, Kuo believes plans are in place while the company increases its non-Chinese production locations to avoid rising costs in the long run.
Last month, Apple asked for a U.S. import tariff exemption on parts for the new Mac Pro, which President Trump publicly said would be denied.