Apple Avoids 15% Tariffs as President Trump Signs off on Phase One of a Trade Deal with China
It's being reported this afternoon that Apple just avoided 15% tariffs on its most important products, the iPhone, iPad and MacBooks, after U.S. President Donald Trump signed off on a trade deal with China.
The new import duties were due to kick in Dec. 15 and could have added about $150 to the price of iPhones during the crucial holiday shopping season, according to Wedbush Securities analyst Dan Ives.
Dan Ives wrote in a note to investors following news of the trade deal that President "Trump delivered an early Christmas present to Apple." later noting that "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."
Holding product prices steady while swallowing additional tariffs would have cut Apple earnings per share by about 4% next year. If the company reacted by raising iPhone prices, demand would shrink 6% to 8% in 2020, Ives estimated.
Apple already is paying duties on the Apple Watch, AirPods headphones, iMac desktop computer and HomePod speaker. Some of those levies may be rolled back. The deal presented to Trump on Thursday included a promise by the Chinese to buy more U.S. agricultural goods. Officials also discussed possible reductions of existing duties on Chinese products, according to people familiar with the matter. For more on this, read the full Bloomberg report.