Apple might have a chance to get around the looming import tax on iPhones.
A new report from Bloomberg claims Apple could get a chance to temporarily dodge the $150 USD import duty on iPhones if US President Donald Trump decides to delay China tariffs. The tariffs are due to kick in this Sunday, and Chinese officials expect Trump to delay the import duties.
“A 20-month trade war between the U.S. and China came to a head this week as a key deadline looms,” reads the report. “This Sunday, 15% tariffs are due to kick in on the iPhone. Chinese officials expect U.S. President Donald Trump to delay the import duties, granting Apple a temporary reprieve. But negotiations have been fraught with missed deadlines and surprise about-faces.”
“Like everyone else in technology, Apple is hoping the tariffs don’t go into effect,” said analyst Shannon Cross of Cross Research.
Apple is already paying a 30 percent tax on AirPods, Apple Watch, and iMac. However, the Cupertino company did not raise the prices to maintain the status quo and keep the demand flowing. However, if it has to pay duties on the iPhone, which is its most selling product, Apple can’t contain a price hike.
Wedbush Securities analyst Dan Ives predicts that Apple might see a 6 to 8 percent shrink in demand for its phones if it raises the prices. The iPhone maker could also seek a tariff waiver, something that it managed to with the Mac Pro, but then it would have to pledge to assemble more products in the US.
“Cook has solid arguments to get the iPhone and other company products off the list of China-made goods slated for a 15% tariff,” Bloomberg Intelligence analyst John Butler wrote in a note. “Apple can’t easily relocate its production facilities out of China, which took years to establish.”
Apple “more than any company out there has the most to lose if this tariff war does not see a truce,” Ives added.
Trump, who is usually in favour of import duties, hinted in the past that it might exempt Apple from the December tariffs. He had mentioned that such trade wars create winners and losers, and he doesn’t want Apple to be a loser. Samsung, on the other hand, won’t have to pay import duties as it doesn’t make phones in China.