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China trade war won’t affect Apple pricing

Tariffs implemented by the United States won’t impact the pricing of Apple products, according to a report from reliable Apple analyst Ming-Chi Kuo.

Thanks to supply chain changes implemented by Apple CEO Tim Cook, Apple won’t pass on the potential tariffs to customers, with careful pre-planning helping Apple overcome the risks.

According to Kuo, Apple has been planning for the event for a number of years and should new tariffs of 10% be introduced, Apple will “absorb most of the additional costs due to tariffs, and the prices of hardware products and shipment forecasts for the U.S. market will remain unchanged”.

Of course, that would have an impact on profitability, but Apple would mitigate these over the long term by shifting to new production houses outside of China, such as India and Vietnam.

Kuo added that he expects to see manufacturing outside of China meet the demand for the US market by 2020, so the swallowing of tariffs would only impact the company this year.

However, that figure relates only to iPhone, iPad, and Apple Watch manufacturing – it’s unlikely that Apple would be able to redistribute Mac manufacturing until 2021 at the earliest.

President Donald Trump announced 10% tariffs on toys, games, and consumer electronics in response to China not following though on purchasing large quantities of agriculture.

Trump had previously promised tariffs of 25% back in May, but these weren’t applied in the end.

Kuo’s report conflicts that of Tim Cook, who spoke at the recent post-earnings conference call and told analysts that they should not believe Apple will shift production from China.

During the same chat, Cook said he wanted to keep the Mac Pro production in Texas, USA.

“In terms of the exclusions, we’ve been making the Mac Pro in the U.S. and we want to continue to do that,” he said during the earnings call, “so we’re working and investing currently in that capacity to do so because we want to continue to be here.”

What are your thoughts on the US trade war? Do you think Apple will eventually pass on any tariffs to consumers, or do you not expect the tariffs to be introduced in the first place? Let us know your thoughts via Twitter on @AppleMagazine and check back soon for more news.

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