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The U.S. Trade Representative on Tuesday announced the 10 percent tariff that was set to hit $300 billion worth of Chinese goods on Sept 1. will be delayed until Dec. 15 for products like cell phones and laptops, likely including the iPhone and MacBook. Apple’s stock soared on the news.
The announcement is good news for Apple, which in June warned such a tax would result in a reduction of its contribution to the U.S. economy and weigh on its global competitiveness. Apple had sought a tariff exemption for iPhones and MacBooks, but Trump rebuffed its attempt.
The tariffs going into effect on Sept 1. would’ve had big implications for Apple, according to Wedbush Managing Director Dan Ives.
“With ~40% of iPhones sold globally coming out of the US heading into an important trifecta smartphone launch, at this point we DO NOT believe Apple will pass these tariff costs to US consumers on the new smartphones hitting the market this September," he said, adding that the iPhone maker would've taken a 50 cent to 55 cent a share hit for its full-year 2020 earnings as a result of absorbing the tariffs.
If the tariffs do go into effect at a later date, Apple could look to produce at least part of the iPhone outside of China, according to Ives.
“We believe Apple is aggressively looking at alternative options within the supply chain in light of this US/China UFC trade battle around moving 5%-7% of iPhone production to India and/or Vietnam, away from China, which would in a best case scenario be ready to roll 18 months from now in our opinion,” he wrote.