Wednesday, 28 November 2018 06:31

Trump tariff threat a double whammy for Apple Featured

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Trump tariff threat a double whammy for Apple Pixabay

Just when things are already looking shaky for Apple this quarter, President Donald Trump has delivered a further kick in the groin by threatening to slap a 10% tariff on iPhone imports from China. However, analysts are saying China’s possible response could make things even worse for the company.

After an already horror fourth quarter run, in which news emerged of disappointing sales of the new iPhone XS and XR series, the news that further upward price pressure may be placed on Apple’s already premium priced phones has spooked the market.

Apple shares are currently 26% below their peak in October and Microsoft has overtaken Apple as the most valuable company on the market.

According to analysts, the effect of President Trump’s threatened tariff imposition could make things even worse for Apple in China than elsewhere. This is because China is in the curious position of being both an exporter and importer of iPhones.

Analysts say that like all countries China would be hit by the 10% tariff hike on its manufactured goods when it imports finished phones for retail sale from Apple.

However, if China retaliates by imposing its own tariffs on imported phones from the US company, then Apple will receive a double dose of tariffs making its iPhones even more expensive in China, a market where Apple is already having a hard time competing with local brands.

With disappointing iPhone sales forecasts for the holiday period, Apple has announced price cuts of up to US$100 for its low-end iPhone XR in Japan in an effort to boost sales in that country. This has prompted speculation as to whether Apple will also announce price cuts for the model in other countries.

Whether any action Apple takes to boost unit sales of any of its product lines including the iPhone have any effect will be hard to discern going forward, however, as the company will no longer reveal product sales figures to the market.

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Stan Beer

 

Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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