How US iPhone Buyers Could sidestep Trump's 40% Tariff Hike

Summary

The Trump administration has announced significant import tariffs on several countries, including China, India, Thailand, and Vietnam—key manufacturing hubs for Apple. These tariffs could increase the cost of importing Apple products into the US by up to 46%, leading to potential price hikes for consumers or a severe hit to Apple's profits.

Potential Impact:

• Price Increases: If Apple passes on the costs, the prices of its products could rise by about 40%. For example, a base-model iPhone 16 Pro assembled in China would increase from $999 to $1,338.
• Profit Margins: Absorbing these costs would result in an estimated 32% cut in both profit and earnings per share (EPS).

Reasons for Exemptions:

• Negotiation Tactic: Some believe the tariffs are intended as a negotiating tactic to secure concessions from affected countries.
• Precedent: In Trump's first term, Apple successfully secured exemptions from similar tariffs on Chinese imports.
• Financial Impact: The severe financial impact on both Apple and US consumers could lead to exemptions being granted to avoid widespread economic damage.

Conclusion:

The most likely outcome is that a face-saving solution will be found, potentially exempting Apple and other major US companies from the full brunt of these tariffs.