Apple Avoids iPhone Tariffs as U.S. and China Reach Trade Deal
Speaking in a note to investors shared by Bloomberg, Wedbush Securities analyst Dan Ives said that the new tariffs could have added approximately $150 to the price of iPhones during the holiday season.
"Trump delivered an early Christmas present to Apple. If this tariff went through it would have been a major gut punch for semi players/Apple and could have thrown a major wrench into the supply chain and demand for the holiday season."
If Apple absorbed the cost of the tariffs, the company's earnings per share would have shrunk by approximately four percent, according to Ives. Raising prices could have caused iPhone demand to shrink by an estimated six to eight percent in 2020.
Apple is paying tariffs on the Apple Watch, AirPods, iMac components, and HomePod speaker, which could potentially be eliminated now that a deal has been reached. Apple in November also applied for tariff waivers on these items.
The tariffs that were avoided today were originally set to be put in place in August, but were delayed until December 15 to give the U.S. and China more time to reach an agreement.
Apple CEO Tim Cook has been speaking with Trump about the tariffs, and in August reportedly made a "good case" arguing that tariffs would put Apple at a disadvantage with rivals like Samsung. Apple earlier this year also sent a letter urging the Trump administration not to proceed with the tariffs.
Cook in late October said that he was confident the United States and China would resolve the trade dispute. "I don't know every chapter of the book, but I think that will eventually happen," said Cook.
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