Not meant to be political in nature but more on a timing of a purchase.
Do we anticipate apple raising prices as a result of upcoming tariffs?
Do we anticipate apple raising prices as a result of upcoming tariffs?
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Do we anticipate macs to be impacted by upcoming tarrifs
- Thread starter dukebound85
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One way to get an indication is to look at what happened when the last round of tariffs were imposed. My memory is a little foggy but I seem to remember that Apple was able to obtain some exemptions for its finished products (hence Tim C.’s recent actions surrounding the inauguration) while a lot of components were hard hit.
As I recall, you are a FIRE person who is familiar with financial markets so if you are concerned about Apple increasing prices but are not ready to buy immediately, perhaps you could hedge your risk through some equity, option, or currency positions. Or if you think interest rates will increase, simply park some cash in a money market fund until you are ready to make an Apple purchase.
HobeSoundDarryl
macrumors G5
If it's a blanket tariff on all products made in China (with no exceptions), China will be paying more to ship such products, billing Apple more to cover the tariffs and Apple will then bill buyers more to protect that all-important margin.
I would expect tariffs to be short lived. These are just temporary till a trade agreement gets worked out. I’d say six months or so. I don’t think it will affect Apple prices at all.
I’d say that is one scenario, for sure. But even if tariffs are levied against all imports from China, I don’t view Apple price increases as inevitable because there are many workarounds companies can take (for example, finishing products in unaffected countries or shipping goods through alternative countries) plus Apple has so much leverage over many of its suppliers that Apple can refuse to have tariff costs passed on to it.
HobeSoundDarryl
macrumors G5
Such possibilities exist. However, Apple already strong arms suppliers to the MAX... so they may not have enough margin left on their end to just absorb the tariff amounts... even at risk of losing Apple's business. If the tariff is- say- $5 and they are only making $3, they probably don't opt to lose $2.
During Covid, via excuses & spin about "supply chain", "inflation" and "covid", Apple FATTENED their business margin. Yesterday, they announced another record quarter with an incredible 46.9% margin... up from the long-term historical norm of about 38-40% dating back to Jobs. My gut guess is that Apple is working towards a full 50% margin and stuff like this is the perfect excuse to UP prices, blame it on tariffs and pad the hikes a bit at the same time. In other words, tariffs can be the covid-like, smoke-screen to fatten margins even more while shifting apparent blame to something beyond Apple's control... just like Covid & Covid-related stuff.
Yes, Apple could "close" production for things in China and move them to other countries, but I'm under the impression that Apple is towards JIT production, so ceasing to produce to then move elsewhere will take time and they would likely run out of supply in the time it takes to make the move.
Besides, nothing says the tariffs won't stay with only the 3 countries named. So where exactly should Apple move production with confidence? Where can they move assembly that will not be on the next list... UNLESS that's the U.S.... which would then be subject to relative cost-of-labor "tariffs"... and who knows how long it would take American labor to get up to speed on assembling Apple tech.
During Covid, via excuses & spin about "supply chain", "inflation" and "covid", Apple FATTENED their business margin. Yesterday, they announced another record quarter with an incredible 46.9% margin... up from the long-term historical norm of about 38-40% dating back to Jobs. My gut guess is that Apple is working towards a full 50% margin and stuff like this is the perfect excuse to UP prices, blame it on tariffs and pad the hikes a bit at the same time. In other words, tariffs can be the covid-like, smoke-screen to fatten margins even more while shifting apparent blame to something beyond Apple's control... just like Covid & Covid-related stuff.
Yes, Apple could "close" production for things in China and move them to other countries, but I'm under the impression that Apple is towards JIT production, so ceasing to produce to then move elsewhere will take time and they would likely run out of supply in the time it takes to make the move.
Besides, nothing says the tariffs won't stay with only the 3 countries named. So where exactly should Apple move production with confidence? Where can they move assembly that will not be on the next list... UNLESS that's the U.S.... which would then be subject to relative cost-of-labor "tariffs"... and who knows how long it would take American labor to get up to speed on assembling Apple tech.
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At the moment, I’d say nowhere because the current US economic decision-making regime makes it extremely difficult to anticipate events. But I believe it is likely that there will be bilateral trade agreements (as opposed to regional or global) in the next 6-24 months that could yield some candidate countries. Another tactic, which is used by luxury brands to obtain the “Made in France” or “Made in Italy” designations on their goods, is to complete all but the final assembly in low-labor-cost countries. Similarly, Foxconn could take iPhones to a, say, 85% completion level in the PRC and do the final 15% in a country or city-state not subject to tariffs.
In any case, Apple, along with pretty much every major tech firm, already has a lot of expertise in avoiding domestic regulations and taking advantage of loopholes in various countries’ laws. For example, there’s the Double Irish With A Dutch Sandwich tax avoidance technique.
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Didn't Trump want to hit TSMC with tariffs too?
Isn't TSMC a major Apple chip supplier?
Will Trump do it?
www.pcmag.com
Isn't TSMC a major Apple chip supplier?
Will Trump do it?
Trump To Tariff Chips Made In Taiwan, Targeting TSMC
The tariffs would ensnare cutting-edge smartphone and PC-related chips for Apple, AMD and Nvidia if enacted. But Trump is betting his plan will bring more chip production to the US.
Import tariffs aren’t charged to the exporter though. So there’s no costs to pass to Apple.
Tariffs are charged on the importer. So it’s Apple themselves who need to pay unless APPLE PASS IT to the exporter.
I would think that apple (not necessarily others) will absorb them somewhat. As in, apple will be charged more to import from china, but they will take the difference out of their margin… Apple will pay it.
Why? They want to present themselves as a US company and charging an extra 10% and then blaming it on tariffs will not be a good look. Also, apple’s margins are such that they can afford to absorb this in the short term.
I could be wrong however.
Why? They want to present themselves as a US company and charging an extra 10% and then blaming it on tariffs will not be a good look. Also, apple’s margins are such that they can afford to absorb this in the short term.
I could be wrong however.
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They won't if this is brief, but yes absolutely otherwise.
One of the reasons why I moved my upgrade cycle up by at least a year was because I had a feeling this would happen. Any tech product I thought I might need in the next 12-24 months, I picked up in December.
The Tariffs are paid by the importers, not the exporters. It's a mechanism to reduce what people want to buy, not what people want to sell.
HobeSoundDarryl
macrumors G5
Whatever the mechanism, whoever pays will pass the added cost on to the next link in the chain vs. magically eating it so we customers are unaffected.
They haven’t been enacted yet. They don’t start until Tuesday, but I doubt any Apple pricing would change immediately. It would be in future pricing cycles… probably when the M4 Air is released.
Nobody knows if Apple will eat the 10% tariff or if the Tariffs will be around In any case I don’t think it’s worth worrying about
HobeSoundDarryl
macrumors G5
Tariffs add costs. If it costs $X pre-tariff, it costs $X + $T when the tariff is added. Somebody absorbs the cost of the tariff. That could be Apple and/or it could be vendors/manufacturers in the countries where tariffs are applied. Whoever takes on the new cost likely then adds at least that cost to their customer- be that Apple or end buyers (us consumers). Ultimately, unless someone up the manufacturing chain just absorbs the new cost (by cutting their own profit margin), end users will pay (more).
Trumps tariffs are about adding this new "tax" onto products made outside of the U.S. but then imported into the U.S. to be sold (within the U.S.). Since I would NOT expect Apple to just eat this tax out of their margin, either Apple consumers and/or the vendor/manufacturer likely pays this tax. The latter MIGHT happen- that is, some vendor might... MIGHT... absorb the cost of the tariff so Apple can still make their full margin with customers still paying about the "same." However, I would expect vendor/manufacturer to then strike a new deal with their customer- Apple- to cover the added cost. Apple then pays more for what they provide... and passes that added cost on to us consumers. So we consumers ultimately pay for tariffs.
Apple could try to strong arm the vendor/manufacturer to absorb this added cost but maybe the existing deal is already too tight to do that? If so and if Apple doesn't want to eat the cost and/or up the pricing for Apple products, Apple would need to shop around for another vendor/manufacturer. I would then expect the new vendor/manufacturer quote to include the added cost of a tariff if it applies to them. In short: I wouldn't bet much on this higher cost of manufacturing stuff being absorbed somewhere up the chain. Ultimately, the consumer pays for added costs.
Does a customer in the EU end up paying more due to new U.S. import tariffs? That depends on how Apple chooses to pass on those costs. Would U.S. consumers alone be assigned the added costs of tariffs or would Apple spread it around to all customers on a global basis? Unknown. Conceptually, this is a U.S. tax that should be dealt with by U.S. companies like Apple and/or their customers within the U.S. But Apple can do whatever it wants with pricing. So I wouldn't make a big bet on any particular outcome in which only Apple knows what it will do with billing to incorporate a new cost of tariffs. Conceptually, Apple could bill ALL of the added costs of U.S. tariffs to the EU per some strategy to keep U.S. pricing about the same. Would that be unfair? Yes! But as seller, Apple can do whatever it wants to deal with a new cost.
The correct answer to this question is unknown... until Apple decides how it wants to handle it and then does.
Trumps tariffs are about adding this new "tax" onto products made outside of the U.S. but then imported into the U.S. to be sold (within the U.S.). Since I would NOT expect Apple to just eat this tax out of their margin, either Apple consumers and/or the vendor/manufacturer likely pays this tax. The latter MIGHT happen- that is, some vendor might... MIGHT... absorb the cost of the tariff so Apple can still make their full margin with customers still paying about the "same." However, I would expect vendor/manufacturer to then strike a new deal with their customer- Apple- to cover the added cost. Apple then pays more for what they provide... and passes that added cost on to us consumers. So we consumers ultimately pay for tariffs.
Apple could try to strong arm the vendor/manufacturer to absorb this added cost but maybe the existing deal is already too tight to do that? If so and if Apple doesn't want to eat the cost and/or up the pricing for Apple products, Apple would need to shop around for another vendor/manufacturer. I would then expect the new vendor/manufacturer quote to include the added cost of a tariff if it applies to them. In short: I wouldn't bet much on this higher cost of manufacturing stuff being absorbed somewhere up the chain. Ultimately, the consumer pays for added costs.
Does a customer in the EU end up paying more due to new U.S. import tariffs? That depends on how Apple chooses to pass on those costs. Would U.S. consumers alone be assigned the added costs of tariffs or would Apple spread it around to all customers on a global basis? Unknown. Conceptually, this is a U.S. tax that should be dealt with by U.S. companies like Apple and/or their customers within the U.S. But Apple can do whatever it wants with pricing. So I wouldn't make a big bet on any particular outcome in which only Apple knows what it will do with billing to incorporate a new cost of tariffs. Conceptually, Apple could bill ALL of the added costs of U.S. tariffs to the EU per some strategy to keep U.S. pricing about the same. Would that be unfair? Yes! But as seller, Apple can do whatever it wants to deal with a new cost.
The correct answer to this question is unknown... until Apple decides how it wants to handle it and then does.
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It depends the supply chain. If they don't involve components imported into the USA (and then exported to EU) then hopefully not. That is my assumption for Australia - Apple devices and components are made in SE Asia or China or Taiwan.
But, as @HobeSoundDarryl says, Apple could get EU and rest of the world to subsidise US customers.
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Besides effects on finished products (e.g. a MB Pro) we should consider also effects on single components (SSD, resistors,...) and on raw materials needed for these (chemicals for batteries, glass for the display,...).
We don't know precisely where Apple and its suppliers get these from: so net effect is highly uncertain.
For sure price is not gonna decrease.
We don't know precisely where Apple and its suppliers get these from: so net effect is highly uncertain.
For sure price is not gonna decrease.
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yes, this sums up the strategy.
next month there are US tariffs from imports only from Canada and Mexico