How Apple Could Navigate Trump's Tariffs, According to Gurman

[MacRumors]

Apple is likely to take a multi-pronged approach to manage the impact of impending tariffs on its products, according to Bloomberg's Mark Gurman. The company faces looming challenges, as new tariffs will affect not just China-based production but also the very countries Apple has diversified into.

The upcoming tariffs range from 20% to 46% across Apple's global manufacturing hubs. India, where Apple increasingly builds iPhones and AirPods, will face a 26% tariff. Vietnam, which produces AirPods, iPads, Apple Watches and Macs, will be hit with a 46% levy. Malaysia, Thailand, Indonesia, and even Ireland will face tariffs between a 20% and 37%.

Gurman believes Apple will pursue a combined strategy to mitigate these impacts. First, he says the company will likely pressure its component suppliers and manufacturing partners to reduce prices. Second, Apple may absorb a portion of the increased costs, eating into its typical hardware profit margin of around 45%.

Third, and perhaps most concerning for consumers, Apple could consider iPhone price adjustments. The company has already implemented price increases in other markets in response to tax policies, currency fluctuations, and inflation. "I expect that Apple will seriously consider iPhone price adjustments," writes Gurman. "It helps that consumers have probably heard about the outside factors here and won’t see it as a cash grab."

Finally, Apple will likely accelerate its supply chain diversification efforts. While the company won't be able to rapidly shift production to the United States, it may prioritize shipments from countries with lower tariff rates, such as routing more iPhones from India rather than China.

Apple has been stockpiling inventory in the U.S. for months in anticipation of the tariffs, which could delay price increases until the iPhone 17 launch in September. Units already in the U.S. are exempt from the tariffs, which officially take effect on April 9.

Despite Apple CEO Tim Cook's efforts to cultivate a relationship with Trump, including attending his inauguration and pledging $500 billion in US investments over the next four years, the company has so far not been successful in securing exemptions.

For consumers wondering whether they will have to pay more for an iPhone this fall, Gurman suggests Apple might become more aggressive with trade-in specials and installment plans to offset potential price increases, or possibly revive its previously considered hardware subscription service.

Apple has not yet made any comment on the tariffs or its plans going forward, but the company is surely working behind the scenes to calculate their impact.

Note: Due to the political or social nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: How Apple Could Navigate Trump's Tariffs, According to Gurman

 

[DHagan4755]

And then again, by the end of the month, the tariffs situation could be resolved. We just don't know.

 

[JapanApple]

And then again, by the end of the month, the tariffs situation could be resolved. We just don't know.

good point. Apple will weather this storm like they have others in the past.

 

[joiwomcow]

"Third, and perhaps most concerning for consumers, Apple could consider iPhone price adjustments."

It's not an adjustment. It's an increase. Apple is increasing its prices, due to a tax on imports, which the American people voted for.

 

[Aeronauts]

Apple can make adjustments in their supply chain but ultimately if the tariffs continue they will have to raise prices or lower their margins. I hope it’s the latter.

 

[PsykX]

good point. Apple will weather this storm like they have others in the past.

They tried to by saying they would invest 500 billion $ in US territory in the future, but it didn't change a single thing.

 

[Bungaree.Chubbins]

I’m just hoping they don’t inflate prices around the rest of the world to subsidise costs inside the U.S. They’re already expensive enough out here!

 

[Aeronauts]

Expect to see a greater emphasis on revenue from services and subscriptions as these are not subject to any tariffs.

 

[Denzo]

Realistically, there is a ceiling that people will pay for an iphone.. and I honestly believe we are at it. I had every iPhone since the 3GS, stopped at the 13PM.. becasue replacing an almost identical phone for $2000AUD+ stopped making sense. I did buy my wife the latest one for our anniversary.. but man 2500AUD for an iphone.. wouldnt do that again in a hurry.. if they think they will keep growing at what? $3k?

They need to relax. Its a phone and unlike when I bought all the earlier model iphones, theres a lot of solid competition.. but maybe its just my opinion.

 

[JapanApple]

They tried to by saying they would invest 500 billion $ in US territory in the future, but it didn't change a single thing.

Ok, whatever it is about. Pessimistic opinion is at times in form of nonsense

 

[foliovision]

Come on guys, Apple will either onshore assembly with ridiculously low nominal prices for parts import (arbitrage) or will pick a country for special privileges together with State Department and CIA and move all its assembly there. Say Taiwan – puts a big money pot in Taiwan's hands to buy US arms.

There's no way that any US administration sinks Apple's ship. It would be political suicide. Of course, this would change were Apple to take sides against an administration. Then they could be targeted as an example to any company opposing imperial policy. Hence Tim Cook clubbing around with Trump. At the end of the day, Cook follows power wherever it leads him.

Jobs might have taken a stand, either for or against or painstakingly neutral. Jobs believed that technology should be private and politically neutral. He deeply understood the danger to both the tech industry and the world if our creative and work tools became spyware. There isn't anyone significant in tech with as much intellectual backbone and philosophical depth as Jobs now, except maybe Musk who is kind of a Joker to Jobs's Batman.

And let's not even get started on dark agents of oppression like Peter Thiel or even Sam Altman.

 

[picpicmac]

For Macs, the option not mentioned is reconfiguring the base models.

For example, the base Mac Mini goes from $599 to $799, but now comes with 512GB internal storage, so it seems like a wash... except Apple's pricing ladder already factors in increasing margins.

Another option is to do what the packaged food industry does: "shrinkflation". E.g., for $129 you no longer get a 1.8m TB4 cable but a 1m TB4 cable. Then add a new cable size, 2m, that costs more than what the old 1.8m cable cost.

There are all sorts of ways to skin a cat.

 

[foliovision]

Realistically, there is a ceiling that people will pay for an iphone.. and I honestly believe we are at it.

No kidding. I'm buying an open box iPhone 15 Pro 512GB now at half price not because I didn't want one two years ago but there's no way these little boxes are worth north of €1500. Like you, my wife did get an iPhone 16 Pro Max just after release (10% discount) but she's happy with 256GB. She was moving from an iPhone 11 Pro Max and I wanted her to enjoy the soccer mom zoom and better video quality.

 

[picpicmac]

There's no way that any US administration sinks Apple's ship. It would be political suicide.

I'm convinced that Trump does not think like that.

If he sunk Apple he'd consider it "winning", given Apple is a California based company.

 

[TechWhisperer]

Neither the government nor Apple genuinely cares about you. Stick with the tech you’ve got, your wallet will thank you for it.

 

[joiwomcow]

Apple can make adjustments in their supply chain but ultimately if the tariffs continue they will have to raise prices or lower their margins. I hope it’s the latter.

Apple is not a charity. There's no reason for them to lower their margins. The voters elected to pay higher prices through increased consumption taxes on imported goods. This tax cost is to be passed on to the people who voted for it.

 

[kiranmk2]

To be honest, given the length of time and cost it's going to take for any significant reshoring of manufacturing to the US, why would any company do anything beyond what it is already planning to do? In 4 years (or 4 months) the tariffs may be gone and these companies are left with an expensive investment in the US that acts as a fiscal drag compared to companies with less US manufacturing.

 

[djphat2000]

Apple will negotiate lower prices for all parts within an iPhone.
Then, they will have those parts shipped to the lowest tariffed country for assembly.
Then, they will ship those parts to Canada and or Mexico.
Then have the drug cartels smuggle them in tariff and tax free!

🤣

 

[SBlue1]

Apple can make adjustments in their supply chain but ultimately if the tariffs continue they will have to raise prices or lower their margins. I hope it’s the latter.

No way Apple will lower the margins. Their stock already took a 33% hit at the time of me writing this. How low do you want them to be? Half what they used to be just a few months ago?

 

[TechRunner]

Over 50 nations have approached the administration about sitting down to negotiate these tariff increases. While we might see increases on some imported goods, I highly doubt they will reach the level that most doom-and-gloomers are screaming from the rooftops.

 

[Expos of 1969]

Another option is to do what the packaged food industry does: "shrinkflation". E.g., for $129 you no longer get a 1.8m TB4 cable but a 1m TB4 cable. Then add a new cable size, 2m, that costs more than what the old 1.8m cable cost.

There are all sorts of ways to skin a cat.

iPhone Mini fans rejoice! It will be coming back as a result of the tariffs.

 

[Aeronauts]

No way Apple will lower the margins. Their stock already took a 33% hit at the time of me writing this. How low do you want them to be? Half what they used to be just a few months ago?

Higher prices will lead to lower sales. Either way they will have take a hit. I don’t care about their share price.

 

[djphat2000]

On a serious note, I don't expect the price to increase as much as people first thought.
My bet is they get it down to about 5% increases MSRP. They will put the emphasis on the higher end models, and give you more storage, and a better screen. Since the most expensive parts will be made in the US (CPU/SOC). While Samsung will see full on tariff prices affect their phones. Qualcomm better get with local TSMC and make their chips in the US soon!

 

[SBlue1]

Over 50 nations have approached the administration about sitting down to negotiate these tariff increases. While we might see increases on some imported goods, I highly doubt they will reach the level that most doom-and-gloomers are screaming from the rooftops.

Oh come on, your president is proud of what he’s done. He’s not going to back down. Like someone from his staff just recently said to a journalist: Trump voters think he’s playing 3D chess, when in reality, we’re constantly trying to stop him from eating the pieces.

 

[djphat2000]

Higher prices will lead to lower sales. Either way they will have take a hit. I don’t care about their share price.

A lot of Americans should care about their share price. As it will affect their 401K and or other retirement returns. Many investors have Apple in their portfolio's. Along with other technology companies. The current stock market crashes are affecting those today that plan on retirement. Either now or very soon. Which is A LOT of people.

For those that have time for the markets to correct it's ugly but not life changing. For those that are either now or close to it. Or worse, being forced to early retire. This is chaos. As you have to watch the markets drop and know you CAN NOT take your money out now. Or you lose 30% or more of your savings because Trump is a buffoon.