Morgan Stanley analysts believe that Apple will take multiple steps to mitigate tariffs on Chinese imports to the United States, including employing non-Chinese assemblers and suppliers.
The August 1 threat to levy a 10% tariff on $325 billion of electronics imported to the United States from China by President Donald Trump is one that would also cover Apple products, something previous tariffs that were implemented or threatened didn’t include. For the new tariff, due to start from September 1, all of Apple’s products from China arriving on US soil would be affected, with the company failing to secure tariff waivers this time around.
In an investor note seen by AppleInsider, Katy Huberty of Morgan Stanley writes the threat of tariffs is not new for Apple, and it has been an overhang of the wider tech industry since April 2018, when the first tariff proposals were made.
“Apple has had 16 months to work with supply chain partners and contract manufacturer on how to mitigate the tariff cost,” the note states. “And we expect Apple to take multiple steps to limit the tariff impact.”
Apple is expected to take advantage of the diversified manufacturing base of Hon Hai, its major assembly and contract manufacturer, as approximately 25% of its production is available in other countries, including Taiwan, India, Vietnam, Thailand, and other territories. It is also suggested that an increase of production in factories in India could serve as the “most near-term alternative location” for assembly to avoid tariff costs.
MacDailyNews Take: The risk of tariffs to Apple have been, and will likely continue to be, overblown.