What just happened? Apple is breathing a sigh of relief today after President Trump signed a limited trade deal with China. The agreement will stop the potential 15 percent tariffs on Cupertino’s most popular products, including iPhones, iPads, and MacBooks, which could have seen Apple increase their prices or take on the extra expenses itself.
In a note to investors from Wedbush Securities analyst Dan Ives, it’s claimed the tariffs could have added $150 to the price of a base model iPhone 11 Pro if Apple chose to pass the costs onto its customers.
“Trump delivered an early Christmas present to Apple,” Ives said in the note, which was obtained by Bloomberg. “If this tariff went through it would have been a major gut punch for semi players/Apple and could have thrown a major wrench into the supply chain and demand for the holiday season.”
With consumers already weary of high-priced smartphones, Ives believes iPhone demand would have fallen by 6 to 8 percent had the handsets seen a price jump. If Apple had chosen to absorb the costs, he estimates its earnings per share would have dipped by 4 percent.
Apple still pays 15 percent tariffs on some parts found in the Apple Watch, AirPods, HomePod, and others, and in September, the US Trade Representative’s office denied its request to be exempt from the 25 percent tariffs that affect parts for the Mac Pro. However, the new phase one deal should lead to a phase two agreement, which could see these tariffs rolled back.