A 20-month trade war between the U.S. and China came to a head this week as a key deadline looms. 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.
Apple already is paying 30% duties on the Apple Watch, AirPods headphones, iMac desktop computer and HomePod speaker — and the company hasn’t raised prices to compensate.
If the company takes a similar approach with its more-popular products, the impact will be larger. The iPhone, iPad and Mac generate almost three quarters of Apple’s annual revenue… Holding prices steady while swallowing additional tariffs would cut earnings per share by about 4% next year, according to Wedbush Securities analyst Dan Ives… If Apple raises iPhone prices, demand would shrink 6% to 8% next year, Ives estimated… The other option is tariff waivers.
MacDailyNews Take: A “Phase 1” trade deal between the U.S. and China would likely take this 15% tariff threat off the table for good.