You’ve likely heard about the intense conversations between the United States and China over tariffs. The US government has been inconsistent, thus far, on what affects a trade war could have on the average person, and the stock market—which loves consistency—has taken a beating with all the rumors and speculation. However at least one thing is clear, Apple phones are going to get more expensive.
Katy Huberty, an analyst with Morgan Stanley, wrote a note on Friday concluding that one element of the growing tariffs could “have considerable ramifications across Apple’s supply chain.”
This might be surprising if you remember Tim Cook’s statements late last year. The Apple CEO has been publically against any kind of trade war with China, but noted in an interview with Good Morning America last year that he thought the Trump administration recognized tariffs on products like phones would not be “really great for the United States.”
Unfortunately, Apple may not be safe in the long run. The Trump administration is increasingly expected to apply tariffs to the remaining goods that the U.S. imports from China. If it went all the way with said tariffs, taking things to their extreme, then, according to The Street, Huberty believes that possibility would have considerable ramifications for Apple. “A 25% tax on the remaining $267 billion of goods exported from China to the U.S. would have considerable ramifications across Apple’s supply chain,” Huberty wrote. And who would pay that?
If it’s consumers that means a $1,000 phone could now be $1,160. Given that the high price of Apple phones has meant fewer phones sold in the last two years, Apple might be reluctant to raise the price again. Instead, it could eat the import cost—something Apple, with billions in its war chest, can certainly afford to do.
But that would mean a drop in revenue which could mean a drop in stock price when Apple announces the drop in reve