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Kuo: Apple Likely to Absorb Any US Tariff Cost Increases on iPhone, iPad, and Mac
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Trump would be tough to campaign against but there is a vast middle that doesn't like the divisiveness of Trump and the far-left candidates. If he's the candidate, then it would be up to the left to decide whether they prefer Trump or someone that can get the votes of the middle.
Apple had ALREADY added the cost of tariff into the cost of iPhones TWO years ago when they increased the price of the iPhone X to $999 and other phone models to a higher price than their usual $649 for the base iPhone. Apple was just ahead of the curve and they don't need to respond now.
I realize its fashionable to hate on Trump but these tariffs are necessary and hurting China far more than they are hurting the US..
US exports to China stand around $100bn.
Chinese exports to the US stand around $600bn.
China is a middle income export based economy, the US is an advanced services and high tech based economy. You can see how this hurts China a lot.
China has been stealing from Western companies for decades now, has no respect for Western IP and copyright, makes it extremely hard for Western companies to enter the Chinese market (they often make them partner with a Chinese company so they can steal knowledge from the Western company). China has also spent a long time dumping on the world markets (producing huge amounts of subsidized things like steel to put Western manufacturers out of business). It also artificially deflates its Renminbi to keep its exports attractive - I could also make an argument that Germany and the US play a similar game to a lesser degree but not to the same extent.
Enough is enough, it could never be sustained for ever and it is far better to tackle the issue now while the US is still by far the worlds number one economic power than later when China is shoulder to shoulder with them.
You are starting to see a lot of companies very quickly diversify their supply chains to places in South East Asia, Africa, Mexico etc which is a good thing. Apple should also face the same hurdles. Chinese manufacturing has become too expensive in recent years anyway, these tarrfis are really just accelerating the transition.
China's economic growth has slowed to the lowest point in 27 years, the US economy is still going strong. This is a massive problem for China where high economic growth is fundamental to their plans and their people's support for the Communist Party.
US exports to China stand around $100bn.
Chinese exports to the US stand around $600bn.
China is a middle income export based economy, the US is an advanced services and high tech based economy. You can see how this hurts China a lot.
China has been stealing from Western companies for decades now, has no respect for Western IP and copyright, makes it extremely hard for Western companies to enter the Chinese market (they often make them partner with a Chinese company so they can steal knowledge from the Western company). China has also spent a long time dumping on the world markets (producing huge amounts of subsidized things like steel to put Western manufacturers out of business). It also artificially deflates its Renminbi to keep its exports attractive - I could also make an argument that Germany and the US play a similar game to a lesser degree but not to the same extent.
Enough is enough, it could never be sustained for ever and it is far better to tackle the issue now while the US is still by far the worlds number one economic power than later when China is shoulder to shoulder with them.
You are starting to see a lot of companies very quickly diversify their supply chains to places in South East Asia, Africa, Mexico etc which is a good thing. Apple should also face the same hurdles. Chinese manufacturing has become too expensive in recent years anyway, these tarrfis are really just accelerating the transition.
China's economic growth has slowed to the lowest point in 27 years, the US economy is still going strong. This is a massive problem for China where high economic growth is fundamental to their plans and their people's support for the Communist Party.
True, I didn't write it for those that keep an eye on world markets and economic trends. More for the 'Orange man bad' brigade that just hates him for the sake of hating him.
Apple's domestic pricing and shipment forecasts aren't likely to be impacted by U.S. tariffs thanks to "proper preparations" made by the tech giant, according to a new investor note by Apple analyst Ming-Chi Kuo and obtained by MacRumors.
Financial markets were rattled last week by President Donald Trump's surprise announcement of 10 percent tariffs on $300 billion of Chinese imports, effective September 1, in retaliation for moves by the Chinese government.
It's still unclear if Apple's products will come under the tariffs on toys, games, and consumer electronics, but if they do, Kuo believes Apple will absorb most of the additional costs in the mid-short term while increasing its non-Chinese production locations to avoid rising costs in the long run.
Apple has been expanding production in India and Vietnam as part of a strategy to diversify product manufacturing beyond China. Kuo thinks Apple's non-Chinese production locations could meet most of the demand from the U.S. market after two years. Specifically he believes iPhone, iPad, and Apple Watch manufacturing could meet demand as early as next year, but adequate Mac production outside of China won't be achieved before 2021.
The predictions stand in contrast to recent comments made by Apple CEO Tim Cook during his July earnings call, in which he was asked about Apple potentially moving out of China. Cook responded: "There's been a lot of speculation about this, [but] I wouldn't put much stock in it. Parts come from everywhere, including the U.S. We currently make the Mac Pro in the US and would like to continue that."
Earlier last month, Apple asked for a U.S. import tariff exemption on parts for the new Mac Pro, which President Trump said would be denied.
Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues 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: Kuo: Apple Likely to Absorb Any US Tariff Cost Increases on iPhone, iPad, and Mac
I think this might be the first time I've seen you talk about any Apple product...
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I have to agree with this. I think people who obsess with politics usually forget the ones who really have the ability to swing an election. The common man who is just working to provide for his family and stay afloat.
Well said, the leadership in China made a huge mistake by not making a deal with Trump and then devaluating their currency. Prices for goods and services will rapidly increase in China (inflation) plus they are having civil unrest in Hong Kong.
Apple wouldn't have to do it if The Great Idiot didn't try and play trade wars. He's managed to drag the world trade market down today as a result - not that he'd give two carps. The ASX 200 is down 2.9%, wiped off $65 billion and the AU$ has dropped massively. 
Doesn't matter. China just devalued it's currency, lowering the prices. More money to the treasury, still cheap iPhones. Win/Win
Manufacturing computers and smartphones is still much cheaper in China than the U.S. While wages have increased, it's still very low compared to any minimum wage jobs in the U.S. at roughly ¥2000 or $300 per month. That's less than five 8 hour work days on minimum wage (of course, work days are longer in these factories, so it would be less). There's also the fact that these factories need enormous numbers of seasonal workers for each year's iPhone season, similar to how Amazon need seasonal works but at a much larger scale. If these barriers cannot be overcome, it would be very hard to move production lines to any high-income country. If Apple is forced to bring manufacturing back to the U.S. they'll probably have to pursue very high levels of automation, which would make it mostly pointless in terms of job creation.
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That sentiment is all well and good, but the reality is consumers have to choose between higher priced products with local manufacturing/support or cheaper products with outsourcing. So far cheaper price seems to be winning. There have been numerous companies that have tried use local manufacturing as a selling point and they invariably fail or get squeezed into a very tiny niche. Unless you are able to completely isolate the entire U.S. economy in a bubble the free market will always gravitate toward to most cost-efficient region to manufacture in.
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Apple wouldn't have to do it if The Great Idiot didn't try and play trade wars. He's managed to drag the world trade market down today as a result - not that he'd give two carps. The ASX 200 is down 2.9%, wiped off $65 billion and the AU$ has dropped massively.
I subscribe to Hedgeye and the CEO has been speaking quite a bit as he has a lot of concerned customers. He had us positioned for what is happening now so people are generally happy. What he's stated over and over again, though, is that the global economy is slowing and has been slowing for a long time. It started slowing for the US in Q2, much later than most parts of the world. Take a look at the 10-year Australian bond chart and tell me that the writing has been on the wall for Australia and New Zealand for months.
Why are ten-year yields -.4% in Germany - a huge export engine for autos? Why were Japanese Machine Tool orders down 38% in June on top of being down 27% the prior year? What does that tell you? Growth slowing.
Why do you think that the $AU is down against the $USD? Have you been watching your interest rates? The Australian dollar has been in a wide range for the past three+ decades (I have assets in Australia so I watch it from time to time). It may be that your central bank wants to export more so engineered a weaker currency.
Agreed. The cost of living is much lower there too. I never understood why my fellow Americans concern themselves with the salaries of workers in other countries. They're not comparable. Even in our own country a salary in a place like Mississippi is not comparable to a salary in San Francisco, but do we say that Mississippi companies are taking advantage of cheap labor?
Exactly. We will probably even see a shipped-in-the-box fast charger and / or 128 Gb base storage.
It did, when China was keeping stable the value of the yuan. Now that China is devaluing its currency, there will be more foreign reserves on hand.
It’s really baffling that people like you don’t get mad at all the politicians who allowed it to get to the point where 85% of our products come from China, but do get mad at the one guy who finally is trying to do something about it.
You seriously dismiss the fact that Idiot Leader and his stupid antics have nothing to do as an impact on a global economy with his my appendage is bigger than yours? https://www.abc.net.au/news/2019-08...rency-manipulator-australian-fallout/11386612
https://www.abc.net.au/news/2019-06-26/scott-morrison-us-trump-xi-china-trade-war-damage/11246486
https://www.abc.net.au/news/2019-08...r-of-words-australian-stocks-plummet/11385452
What's driving growth slowing? "The escalation of the trade war between the two superpowers has traders and investors worried about the outlook for global trade and growth, so riskier commodities such as iron ore and copper have been dumped for the so-called safe-haven of gold, which was up sharply to $US1,457 ($2,155)."
China handles civil unrest with complete ease than economic unrest! They don't have democracy where hours long high pitched studio debates, twitter wars filled with millions of differing opinions!!
Not sure I see that one. They are getting fewer dollars per item shipped and they have to spend more to import raw materials.
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As a plethora of financial charts will show, the global slowdown has been in place for some tine and certainly before last week.
There is no rule that says trade should be balanced. If another country sells what you want to buy and at the right price, you buy it. It really is that simple.
Tariffs are all about politics and have nothing to do with trade.
The former two presidents tried to do something about it but both didn't want to expend the level of political capital to make a difference.