Featured Image Credit: Cheng Xin/Getty Images
Topics: Apple, Phones, iPhone, Technology, News
Gerrard Kaonga
Topics: Apple, Phones, iPhone, Technology, News
Apple made it clear that the tariff’s would be driving up their costs by hundreds of millions of dollars.
On May 1, Apple confirmed that they would be massively impacted by the ongoing trade war caused by Donald Trump’s tariffs.
The tech company noted that the tariffs placed on countries would result in an increase of $900,000,000 in costs to end the second quarter of the year, ending June.
The companies’ CEO Tim Cook has announced the companies has plans to limit the impact of tariffs on the company for the future however.
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Despite this massive increase in cost, during a conference call, Cook said Apple had ultimately faced ‘limited impact’ from tariffs during the second quarter due to shifting its supply chains and inventory.
For the quarter set to end in June, he said: “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 cost.”
He also added that the majority of iPhone to be sold in the US will come from India and the majority of iPads, Macs, and Apple Watches will come from Vietnam.
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This is due to the fact the company spent extra money to ensure they were building their products in nations outside of China.
Cook added: “We have a complex supply chain. There’s always risk in the supply chain.
“What we learned some time ago was that having everything in one location had too much risk with it.”
However, some experts have warned that even with these shifts, the increased costs could eventually be passed on to the consumer.
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Jacob Bourne, analyst at Emarketer, said: “The company’s proposed manufacturing shift to India raises pressing questions about execution timeline, capacity limitations, and potentially unavoidable cost increases that will shrink margins, be passed to consumers, or have a mix of consequences.”
Following Trump’s initial tariff announcement on April 2, analyst at Wedbush Securities Dan Ives warned, in the worst-case scenario, how much the next iPhone could cost.
He said it could cost as much as $3,500 each which is significantly more expensive than the current most expensive smartphone from Apple, the iPhone 16 Pro Max, which retails at $1,199.
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He said: “"For US consumers, the reality of a $1,000 iPhone being one of the best-made consumer products on the planet would disappear.
"It speaks to our point that if consumers want a $3,500 iPhone, we should make them in New Jersey or Texas or another state... the concept of making iPhones in the US is a non-starter in our view at $1,000."