The Trump administration has doubled down on its efforts to ensure that Apple shifts its iPhone manufacturing to the U.S., or risk paying a 25 percent tariff on those imported goods. The increased levies mean that the Cupertino firm will have little choice but to pass those cost bumps to customers, meaning that every iPhone arriving from overseas shipments will be subject to a price increase. However, the National Economic Council Director states that these tariffs will only be absorbed by Apple and not its customers, which is a strange statement to make, considering that any added taxes are always borne by the customer.
Despite Apple being one of the few companies to be singled out, the National Economic Council Director says that the tariffs are not intended to harm the iPhone maker
Speaking with CNBC’s Squawk Box, AppleInsider reports that Kevin Hassett made some head-scratching statements about the tariffs applied on imported iPhones. U.S. President Donald Trump has acknowledged that Apple CEO Tim Cook is his friend, but he does not want Cook to focus on other markets, such as India, for building manufacturing plants. Additionally, the president wants the Chief Executive to divert his attention towards building a local supply chain. Hassett is also calling these tariffs minuscule, but in reality, they could cost Apple millions, adversely affecting the firm’s gross margins.
“Everybody is trying to make it seem like it’s a catastrophe if there’s a tiny little tariff on them right now, to try to negotiate down the tariffs. In the end, we’ll see what happens, we’ll see what the update is, but we don’t want to harm Apple.”
The California-based giant has not commented on Hassett’s recent statements, but the National Economic Council Director probably cannot control how Apple executes its business practices, unless the U.S. government enforces laws that impose a fine on these companies if it is found that the tariffs were passed to customers. Unfortunately, this decision can force Apple to pull part, or its entire $500 billion amount that it has committed to invest in the U.S. during a four-year period.
“If you think that Apple has a factory some place that’s got a set number of iPhones that it produces and it needs to sell them no matter what, then Apple will bear those tariffs, not consumers, because it’s an elastic supply.”
TF International Securities analyst Ming-Chi Kuo previously stated that if Apple wishes to prioritize profitability, it should absorb the 25 percent tariffs on imported iPhones rather than focusing on manufacturing these devices in the U.S. Bloomberg’s Mark Gurman has also commented that there is no universe in which iPhones will started getting produced in the country, with the labor cost alone forcing a price hike.
News Source: CNBC
About the author: Omar Sohail is a reporter and analyst for Wccftech's mobile section, specializing in the technology and business of the mobile industry. His expertise lies in the intricate hardware supply chain, covering developments in semiconductor manufacturing, chip lithography, and camera sensor technology.
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