Tim Cook Explains How Tariffs Are Impacting Apple's Business

[MacRumors]

Apple CEO Tim Cook today provided some insight into how the tariffs levied by U.S. president Donald Trump have affected its business, and the future impacts that Apple is expecting should tariffs continue.

Cook said that tariffs had a limited impact on the March quarter as Apple was able to optimize its supply chain and inventory. Apple can't entirely estimate the impact of tariffs on the June quarter due to uncertainties, but with no changes, the tariffs will add $900 million to Apple's costs. From Apple's earnings call:

Now let me walk you through the impacts of tariffs in the March quarter, and give you some color on what we expect for the June quarter. For the March quarter, we had a limited impact from tariffs as we were able to optimize our supply chain and inventory.

For the June quarter, currently, we are not able to precisely estimate the impact of tariffs, as we are uncertain of potential future actions prior to the end of the quarter. However, for some color, assuming the current global tariff rates, policies and applications do not change for the balance of the quarter, and no new tariffs are added, we estimate the impact to add $900 million to our costs. This estimate should not be used to make projections for future quarters, as there are certain unique factors that benefit the June quarter.

Apple is already sourcing more than half of iPhones sold in the United States from India, while Macs, iPads, AirPods, and the Apple Watch come from Vietnam. For the June quarter, Cook said that Apple expects the majority of iPhones sold in the U.S. to have India as a country of origin, while Apple will continue sourcing other products from Vietnam. Apple will source devices from China for the rest of the world.

Cook said that Apple's operational team has "done an incredible job around optimizing the supply chain and the inventory," and that Apple plans to continue to do those things to the degree that it is able to.

The 20 percent tariffs that Trump put in place earlier this year are the tariffs that are primarily impacting Apple, as many Apple products have been exempted from the 125 percent reciprocal tariffs. Some products, though, such as accessories, are subject to the total 145 percent tariffs.

Cook said that he doesn't know what will happen with the Section 232 investigation that will eventually see tariffs applied to semiconductors, a change that will impact Apple.

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: Tim Cook Explains How Tariffs Are Impacting Apple's Business

 

[vantelimus]

Tariffs are bad. Not just the cost of tariffs is going to be passed along to the consumer. That $900 million in extra costs means lowered profit margin unless Apple increases their prices by tariff cost times (1 + profit margin).

 

[Azeroth1]

Yet you gave him $1 million Tim.

 

[BelgianChoklit]

Orange supporters who will end up in the streets looking for food in garbage can will still defend their dictator. If iPhone prices rise the slogan will be "greedy Apple". Eggs being expensive today "greedy chickens", while that was all Biden's fault months ago.

Loyalty Putin and Hitler could only have dreamt of.

 

[Klae17]

Cheeto in Chief's supporters love paying taxes.

 

[majkom]

Small price to make america great again, again, right Tim Apple?🤣

 

[markgpearse]

So much winning!

 

[mansplains]

We need an eye roll and/or clown reaction on here

 

[robd003]

Tariffs are just a means to get better trade deals negotiated. Don't expect them to last long term as most countries will be smart enough to do some kind of deal like buying more oil & LNG from the US to fix trade imbalances.

 

[It’s always something]

Tariffs are just a means to get better trade deals negotiated. Don't expect them to last long term as most countries will be smart enough to do some kind of deal like buying more oil & LNG from the US to fix trade imbalances.

Trump said the 10% tariffs are permanent. I grant you that he is a liar, so you may be right, however.

 

[colonel179]

Tariffs are just a means to get better trade deals negotiated. Don't expect them to last long term as most countries will be smart enough to do some kind of deal like buying more oil & LNG from the US to fix trade imbalances.

Trump is expecting every country to kneel to him, but that won't happen. Every country will begin planning deals with other countries to not depend as much or nothing at all on the US.

This is having the exact opposite result than what Trump wants, while Americans and the rest of the world is paying the consequences of a lunatic.

 

[GMShadow]

Tariffs are just a means to get better trade deals negotiated. Don't expect them to last long term as most countries will be smart enough to do some kind of deal like buying more oil & LNG from the US to fix trade imbalances.

I expect the Chinese tariffs will remain in place (the initial ones did, something people seem to fail to realize - Biden never removed them and his admin even defended them in court). The goal is to stop funding a geopolitical enemy with designs on Taiwan and other countries.

 

[Jumpthesnark]

Wonder which major retailer will be the first to add a "tariff surcharge" line to the bill? Apple isn't a good candidate for this, because people already perceive it as a premium brand, and I think many feel it is one of the companies that could eat the extra costs.

Punchbowl News reported that Amazon was going to display the tariff fees on their low-cost Haul site, but after that was reported, the WH press secretary angrily (and inaccurately, it turns out) denounced them, and Jeff Bezos, from the podium. So that might have scared some retailers away from calling shoppers' attention to how much the tariffs will cost them on each item.

But someone will do it. I would guess an overseas-based discount retailer, maybe Temu or someone, would be the first.

 

[sesnir]

Tariffs are just a means to get better trade deals negotiated. Don't expect them to last long term as most countries will be smart enough to do some kind of deal like buying more oil & LNG from the US to fix trade imbalances.

The world has called his bluff and moved on.

Your understanding of trade imbalances is wrong. You have a trade imbalance with Apple because you buy from them and they don’t buy from you. So let’s have you pay an extra tax every time you buy from Apple. Are you winning yet?

He. Has. No. Idea. What. He’s. Doing.

 

[Doomtomb]

So he's saying we will never see Made in America.

 

[Orange Bat]

I see it’s another productive discussion in the comments over politics.

 

[wbeasley]

Yet you gave him $1 million Tim.

he gave $1m to the Inauguration. That's system process not a person.

but you know that...

 

[wbeasley]

I expect the Chinese tariffs will remain in place (the initial ones did, something people seem to fail to realize - Biden never removed them and his admin even defended them in court). The goal is to stop funding a geopolitical enemy with designs on Taiwan and other countries.

a country that wants to take Canada and Greenland and Panama Canal... LOL

 

[It’s always something]

he gave $1m to the Inauguration. That's system process not a person.

but you know that...

That reminds me of a question I’ve had: what happens to any surplus cash afterwards? 🤔

 

[kagharaht]

Glad we are up to date. Not buying anything for a very long time from Apple.

 

[Darth Tulhu]

As I said in another post, America must let go of the notion that for America to win, China (or any other country, really) has to lose.

But fascists and rich people cannot see past their supremacy glasses, so I can't wait for when all of this comes crashing down around their ears.

My body and bucket of popcorn are ready for "the rockets red glare" when reality finally hits the (gun-loving) cult members, RIGHT on their (brown-stained) lips.

 

[jole]

Yet you gave him $1 million Tim.

This was the Trump Base -subscription. Tim should have gotten the Trump Enterprise -subscription that included full tariff protection. Rookie mistake: saving some hundreds of millions just to lose billions.

 

[IIGS User]

Apple’s shift away from China has been ongoing for years. This is just speeding up something that was all ready happening.

If memory serves, Apple & China were all ready engaged in a sort of soft break up so much as Apple could make it happen.

Apple doesn’t LOVE China, it just needs them for now. But as soon as they can get out of that marriage, they’re gone.

Apple is just waiting for the proverbial children to turn 18.

 

[JohnC1959]

Apple’s shift away from China has been ongoing for years. This is just speeding up something that was all ready happening.

If memory serves, Apple & China were all ready engaged in a sort of soft break up so much as Apple could make it happen.

Apple doesn’t LOVE China, it just needs them for now. But as soon as they can get out of that marriage, they’re gone.

Apple is just waiting for the proverbial children to turn 18.

Yes, they knew from the start that using China was a mixed bag. I suspect they won't try to fully leave China unless things change a lot but they do want to RELY a lot less on them. I can imagine building product in China helps in some way with selling product in China so continuing to build some product there may still be advantageous.

 

[Darth Tulhu]

Yes, they knew from the start that using China was a mixed bag. I suspect they won't try to fully leave China unless things change a lot but they do want to RELY a lot less on them. I can imagine building product in China helps in some way with selling product in China so continuing to build some product there may still be advantageous.

Perhaps Apple saw the writing on the wall with the red-hats' first go around, and has been trying to diversify because of it.

Now though, America's position in World economics is upside down... WHO the hell knows what the right move is for an American company at this point when the White House and the entire US government is riding on Mac Pro wheels.

The ejection-seat handle is getting more attractive by the minute.