President Donald Trump met with Apple CEO Tim Cook on Sunday to discuss the potential impact tariffs would have on the U.S. tech giant. Trump may be leaning toward providing Apple with some kind of exemption from the import tax, but there’s been no official word yet.
Those new 10% tariffs on various Chinese made goods imported to the U.S. could hit Apple at a time when smartphone sales continue to flatten and just as the company’s accessories, Mac and iPads, are on the rise. If those tariffs do go into effect, Apple could take a hit to its margins, or, in a less likely scenario, pass the added cost onto consumers.
Almost every Apple gadget could become pricier
Will Apple pass the cost of tariffs on to consumers? According to UBS analyst Timothy Arcuri, it’s unlikely. In an analyst note, Arcuri explained, “Apple would likely absorb the initial 10% tariff increase putting pressure on margin, though FX could be slight offset.”
Tariffs could put a damper on 5G iPhone launch
IDC analyst Tom Mainelli, however, says that it depends on when the tariffs take hold, and how long they are in effect. If Trump keeps the 10% tariffs running well into 2020, when Apple is expected to launch its 5G iPhone, Apple might have to pass the tax onto consumers due to that phone’s increased development cost.