Apple's Strategic Moves to Counter Tariff Impact on Global Supply Chain

New Report Outlines Apple’s Strategy to Mitigate Imminent US Tariffs

• Background: The Trump administration announced a tariff plan affecting numerous countries, leading to a 10% drop in Apple’s stock due to the significant impact on its supply chain.
• Tariff Rates: China (54%), India (26%), Vietnam (46%) and other countries with even higher rates.
• Apple's Response:
  • Price Strategy: Apple aims to maintain current prices for its products, which haven’t changed much over the past decade.
  • Cost Reduction Measures:
    • Negotiating better prices from component makers and manufacturers.
    • Absorbing some of the costs due to a high profit margin (45% on average).
    • Implementing short-term price adjustments while assessing long-term strategies.
  • Supply Chain Diversification: Apple is working to reduce its dependence on China, though it’s unlikely to move manufacturing to the US.
  • Inventory Stockpiling: The company has been stockpiling products in the US to avoid tariffs on existing inventory, allowing for normal pricing until new tariffs take effect.
• Future Actions:
  • Apple might consider raising prices but will try to minimize the impact.
  • Potential lobbying efforts by CEO Tim Cook for tariff exemptions.