Apple has narrowly avoided taking a hit in the trade war between the US and China. Bloomberg reports that, with a deal being signed between the two countries, the company avoided 15% tariffs on its porducts. This spared the company from having to raise the prices of its popular products, such as the iPhones, iPads and MacBooks, by US$150 (~RM620).
Wedbush Securitues analyst Dan Ives wrote in a note to investors that the new import duties were supposed to take effect on 15 December. If it went through, Apple would have had to either absorb the additional cost, or raise its prices accordingly. Going for the former would’ve hit the company’s earnings per share by about 4%. On the other hand, going for the latter would’ve meant 6% to 8% less demand for its products in 2020.
Fittingly, in the research note, Ives said that “Trump delivered an early Chirstmas present to Apple”. Bloomberg reports that Apple is already paying duties on the Apple Watch, AirPods, iMac and HomePod speakers. Some of these may be rolled back, and officials are also discussing the possibility of reducing existing duties on other Chinese products.
This, then, sounds like good news, for both the company and fans of its products. And likely more so for Apple than any other company. Ives also wrote that the company has more to lose than any company out there “if this tariff war does not see a truce going forward”. And Apple’s products are pricey enough as they are.
(Source: Bloomberg)
