On the afternoon of December 12, U.S. President Donald Trump signed a trade deal with China that would leave Apple’s iPhone, iPad and MacBook free of high tariffs,media reported. In response, Dan Ive, an analyst at Wedbush Securities, said in a note to investors that the new tariff could push the iPhone up about $150 in price during the holiday season.
“Trump gave Apple a Christmas present in advance. If the tariff is passed, it will be a punch in the face for half-player/Apple and could have a significant impact on supply chains and demand during the holiday season. “
If Apple absorbs the cost of the tariff, it will see its earnings per share fall by about 4%, according to Ive. Higher prices could cause iPhone demand to shrink by about 6% to 8% in 2020.
For now, Apple is paying tariffs on its Apple Watch, AirPods, iMac components and HomePod speakers, which could be eliminated now that an agreement has been reached. In November, Apple also applied for tariff relief for these products.
In fact, Apple CEO Tim Cook has been discussing tariffs with Mr. Trump, who reportedly proposed them in August to put Apple at a disadvantage in the race against rivals such as Samsung. Earlier this year, Apple also wrote to the Trump administration that it would not continue to impose tariffs.