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Echo of the trade war: Apple gadgets rise in price because of trump

Apple gadgets, including Apple Watch, AirPods, and the HomePod column may be subject to duties of 10% Echo of the trade war: Apple gadgets rise in price because of trump

Echo of the trade war: Apple gadgets rise in price because of trump

Apple gadgets, including Apple Watch, AirPods, and the HomePod column, may be subject to duties of 10% due to the ongoing US trade war with China, reports The Verge. At the same time, analysts believe that the introduction of new taxes may affect the price of devices that will become more expensive.

The United States has postponed the introduction of additional tariffs on electronics imported from China until December of this year. This gives hope to equipment manufacturers that relations between the two countries are normalizing, and they will not have to raise prices for their gadgets, as compensation for increased tariffs is expected to fall on buyers.

However, the refusal of decisive action until December concerns only a certain set of products, for example, smartphones and laptops.
Starting September 1, which is just over two weeks away, a 10% tax on smartwatches and speakers, fitness trackers, and Bluetooth headphones are introduced.

This means that several products from Apple, whose production is mainly located in China, such as AirPods, Apple Watch and HomePod, may fall under trade sanctions, the Verge portal reports.
Last year, these categories of goods did not fall under a ten per cent duty after manufacturers wrote to the US authorities. Then, the Apple press service noted that they did not understand how the new tariffs should help the United States if they harm both American companies and American consumers.
Despite the fact that wearable devices make up only part of Apple’s total revenue, a decrease in demand for them due to a possible rise in price can significantly affect the company. According to the results of the financial report for the third quarter of 2019, sales of Apple Watch, AirPods and other “related” devices increased by an impressive 48%, exceeding the volume of iPad sales and almost catching up with the Mac. Experts predict that sales of this product category will become the third-largest source of revenue in the fiscal year 2020.
Alen Sabitov, an analyst with Freedom Finance, told Gazeta.Ru that Trump decided to postpone the introduction of duties from September to December for key Apple products such as iPhone, MacBook, iPad and iPod Touch, which made the company one of the main beneficiaries of yesterday's rally on stock markets.

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“However, the threat of introducing tariffs from September 1 on Apple Watch, AirPods, HomePod speakers and Mac computers remains. We believe that the main risks of tariffs receded for a while after such a decision since goods falling under tariffs from September accounts for less than 15% of our revenue. So, the company can cope with the impact of the September tariffs, ”Sabitov said.
However, the expert does not exclude that the most likely step of management on the threat of tariffs will be an increase in the price of devices next year.
“Otherwise, we can expect a decrease in Apple’s margin by 2-3% in 2020, if in December deferred tariffs are nevertheless adopted. In the long run, import duties may force Apple to transfer production from China to other countries, at least the final stage of assembly, in order to avoid tariffs. But the return of production to the United States, which Trump seeks, is unlikely since it is unprofitable for the company in terms of costs, ”concluded the source of“ Gazeta.Ru ”.
For the first time that Apple technology, whose main production is located in China, could rise in price due to the trade war, they started talking at the end of last year.
Then US President Donald Trump said that American citizens using “apple” gadgets “easily survive” a fee of 10%.
So that companies can avoid higher tariffs on their products, Trump advised them to postpone their production.
“I recommend building factories in the United States and producing goods here. There are many other alternatives, ”said the American leader in an interview with The Wall Street Journal.
In addition, earlier, Trump has repeatedly hinted to Apple's leadership that it transfers its factories to the United States.
“Apple’s prices may increase due to the enormous duties that we levy on China, but there’s a simple solution that you don’t have to pay tariffs due to tax breaks. Make your goods not in China, but in the USA. Start building factories now. Amazing! ”Trump tweeted. However, Apple has its own opinion on this matter - labour in China is much cheaper than in the United States, so the possible transfer of plants to America will mean even more expensive products of the company, which are already one of the most expensive on the market.

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