What the Trump tariffs could mean for Apple
Only about 10% of iPhones are produced outside of China. Thankfully for Tim Cook, this isn’t his first rodeo.
President-elect Donald Trump said yesterday he would impose an additional 10% tariff on goods coming in from China. Ostensibly that’s bad news for Apple, which makes the vast majority of its products in China. As with everything Trump-related, there’s a lot of uncertainty about what will actually happen.
Here are some points to consider:
Thanks to CEO Tim Cook’s relatively amicable relationship with Trump, Apple was exempted from many of the China tariffs during Trump’s first presidency. It’s possible Apple could use that relationship to get an exemption once again — but this time, there’s a long line of other tech CEOs who are doing the same.
Apple currently has some US projects in the works, including an Arizona chip plant and a North Carolina campus that might soften Trump’s stance on the company’s China manufacturing. Cook famously — and smartly — said nothing when Trump incorrectly took credit for helping open a new Apple facility in the US. (It had been open for years.)
Last time around, Apple had argued that it couldn’t make its Apple Watch outside of China and meet American demand for the product. Such an argument might hold less weight now that the company has had a whole other presidency to figure ways out of China production.
Apple has moved some of its China production to India in a bid to lessen its reliance on China and, by extension, its tariffs. Despite that, only about 10% of iPhones are produced outside of China.
If Apple doesn’t secure another exemption, the impact on its gross margins could be significant, analysts say.
China is also an important market for Apple goods. If China retaliates against the tariffs with its own, that could also be bad news for Apple, which gets about 17% of its sales there.
So far the market doesn’t seem to be too worried about Apple. Its stock is currently up about 0.5% today.
