Apple is planning to increase its price for the upcoming iPhone 11. With the new Trump tariff which effects from June 24, may cause a 25 per cent hike on goods. However, Apple may incur losses rather than increasing the price of its products.
#Tariffs are tax burdens paid by importers passed onto consumers as Government confiscates the revenue. The "double taxation" causes businesses and consumers harm, disrupts long term supply chain agreements, lowers productivity and costs the U.S. economy $20 billion (+) / year. pic.twitter.com/cNCfNNIgyb
— DNN Business (@DNNMoney) May 22, 2019
However, Analysts are expecting a hike of 14 per cent on the Apple products with the Trump administration may slap a hike of 25 per cent. Though, the goods that are imported from China worth 300 billion dollars may incur such tariffs. This batch of goods includes the components needed to assemble the iPhones and not the Apple watch and iPods.
Trump tariff can affect price rise of iPhones
On the other hand, to keep a substantial supply chain constants Apple needs to increase the price by 14 per cent. To keep a check on the impact of 25 per cent tariff they need to increase the price. The total cost of a single iPhone XS without no tariffs is 1000 US dollars. However, the addition of a 25 per cent spike, it may cost around 1142 US dollars. J.P Morgan assumes iPhones gross margin may decrease by 4 per cent if Apple doesn’t incur the cost to its customers.
Price surcharges may depend on Apple
Tim Barjarin from Creative Strategies said its unsure about the cost of 25 per cent tariff will raise the price of iPhone. However, certain changes indicate the price but it surely will not move into the increase of the iPhone. In addition, the price of the component is not known that is shipped unless Apple clarifies the details.
When the time is right we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense. We have to be allowed to make up some…..
— Donald J. Trump (@realDonaldTrump) May 14, 2019
During the second fiscal quarter of 2019, Apple boomed with 53.5 per cent of the total sales from the revenue.
Bank of America said in a note if the production cost is incremented with 15 – 20 per cent than the company may observe less demand. Moreover, the US Trade officials are ready with the process of the tariff plans by Monday.