The U.S. is currently in the midst of reforming its laws regarding tariffs on imports from China. At the moment, Apple remains unaffected by these heated trade sanctions. However, if U.S. President Donald Trump decides to increase tariffs on smartphones, Apple officials have disclosed that the company might need to move production operations outside of China, since a large portion of iPhones is manufactured by the Cupertino giant's Chinese partner companies.
Although these new tariffs are yet to be implemented, Apple has already come up with a list of possible candidate countries to shift operations for other products. For now, it is waiting for Trump to make the next move. In a statement made to The Wall Street Journal last month, the U.S. President disclosed that goods produced in China had a high likelihood of being charged with raised tariffs, including laptops and smartphones, and the percentage would probably be set between 10 and 25 percent.
Apple employees have stated that the company does not plan on making any changes to its existing model if the tariff is raised to 10%. However, should it increase to 25%, the firm will be forced to reconsider. According to Bloomberg, a 10% raise can cause a decline of $1 in earnings-per-share, whereas a 25% increase is likely to cause a more dramatic EPS drop of $2.50.
Source: Bloomberg
12 Comments - Add comment