Trump has announced a tariff package that has shaken the markets and put Apple in the spotlight. The company, which manufactures most of its devices in Asia, faces 54% tariffs for products from China, 46% for Vietnam, and 26-27% for India. Just the countries where it has concentrated its production.
Apple opted to diversify its manufacture after Trump’s first presidency, but this strategy has been counterproductive, since new tariffs affect all their production centers. There is no escape. It is the same that has happened to another company closely linked to Apple: Nike.
Why is it important. The Impact for Apple is double: financial and industrial. The company depends on its devices to generate 75% of its almost 400,000 million dollars in annual income – the rest comes from services.
This tariff imposition could increase its annual costs by about 8.5 billion dollars, reducing its benefits by approximately 7%. Its action – like those of many other technological ones, although Apple’s even more – has noticed, with a 9% drop and another 5% in the premarket Friday.
And now what. Apple’s options are limited and none is ideal:
- Absorbing tariff costs, which would erode their profit margins, which are so baggy (around 25%) as sacred for directive and investors.
- Move consumers cost through important Price increases. And Apple has a much less elastic demand than the rest of the brands, but also average prices closer to the limit that the client can assume.
- Combine both strategies, distributing the impact and waiting for the result to be as favorable as possible to your interests.
Another option is to get a tariff exemption such as the one already obtained in Trump’s first legislature.
In figures. Rosenblatt Securities analysis project that Apple would need to increase the price of its devices up to 43% if you wanted to keep their current margins. This would mean:
- An iPhone 16 base would go from $ 799 to $ 1,142.
- An iPhone 16 Pro Max with 1 TB of storage could reach $ 2,300 (from 1,599).
- Even the 16E iPhone, launched in February to $ 599, would rise to $ 856.
The context. Apple has cultivated a relationship with Trump for years that allowed him to avoid tariffs during his first administration. Tim Cook attended Trump’s inauguration and promised large investments in the United States. And has received Trump’s presidency with much better predisposition than in 2017.
In February, Apple announced an investment plan of 500,000 million dollars in the United States, including a plant in Texas and 20,000 jobs in research and development. However, he has not achieved the exemption he obtained in 2018.
The background. Cook has commented several times Apple’s difficulty to produce in his own country, referring among other reasons to the scarcity of the type of qualified personnel in something so specific.
Apple, despite its enviable position in inertia of income, margins and stock capitalization, was already coming from some previous turbulence. For example, iPhone sales without the expected growth or its difficulties with the implementation of its AI. Now, a tariff crisis.
In summary. The clash between the Trump administration and companies such as Apple (but not only Apple) is a clash between two opposite ways to see the economy: the national protectionism of the first and the optimized globalization of the second.
Looking ahead to the consumer, the message is clear: we can prepare for some more expensive iPhone. In the face of Apple, less margin to innovate for the reduction of its benefits. In any case, it will depend on what the company’s response is, if you get an exemption or if there is negotiation on the edge before April 9.
In WorldOfSoftware | China has taken less than a day to respond to tariffs: 34% for all US products
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