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Donald Trump recently announced that starting April 9, the US will impose significant taxes on products imported from other countries.
These new tariffs will hit Apple hard, especially since many of its products, like iPhones, are made overseas.
For example, iPhones coming from China, India, and Vietnam will face extra import taxes of 54%, 26%, and 46%, respectively. This could seriously affect Apple’s profits.
Tim Cook has previously stated that the US lacks the trained laborers with knowledge of modern tooling necessary to compete with China and other nations in the manufacturing sector.
According to Apple analyst Ming-Chi Kuo, if Apple raises its product price, its profit margin (the percentage of money Apple keeps after covering production costs) could drop by 8.5% to 9%.
That’s a big deal for a company with a 46% profit margin in 2024.
However, Kuo suggested five ways Apple could soften the blow.
1. If Apple boosts production in India to over 30% of its global supply and India works out a trade deal with the US, Apple could reduce the damage to its profits to just 1–3%.
2. Most people buying new iPhones in the US choose the pricier Pro or Pro Max models. Apple may increase the prices of these models, as higher-end customers might be more willing to pay more.
3. Apple might encourage companies like Verizon or AT&T to give better deals, making price hikes less noticeable to customers.
4. Apple could give customers slightly less money when they trade in their old iPhones, helping offset the tariff costs.
5. Apple might pressure the companies it works with to lower their prices for making parts or assembling devices.
Despite all this, Kuo believes any drop in Apple’s profits won’t last long. Still, investors are worried, as Apple’s stock has already dropped over 9% since the announcement of the tariffs.
What do you think about these tarriffs? Do you think they’re a necessary evil or will it bring a full-blown recession even closer? Tell us what you think below in the comments, or via our Twitter or Facebook.
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