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Apple Says New China Tariffs Would Boost Prices On Some Products (bloomberg.com)
An anonymous reader quotes a report from Bloomberg: Apple, the world's most valuable company, said proposed U.S. tariffs on $200 billion worth of products imported from China will raise prices for some of its popular consumer goods such as the Apple Watch and AirPods headphones. The Mac mini desktop computer, Apple Pencil stylus accessory for iPads, various chargers and adapters and tooling equipment used to manufacturer and design some products in the U.S. will also be affected, the Cupertino, California-based company told the Office of U.S. Trade Representative in a letter dated Sept 5.
The company said the tariffs would "show up as a tax on U.S. consumers" and "increase the cost of Apple products that our customers have come to rely on in their daily lives." Beyond the core products, Apple said accessories like the HomePod speaker, some Beats speakers, AirPort and Time Capsule internet routers, the Magic Mouse and Magic Trackpad, and leather cases for the iPhone, iPad, MacBook and Apple Pencil would be affected. It said some of the parts it relies on for product development, including processors and research equipment, would also be hit by the tariffs. On Friday, President Trump said he's prepared to impose tariffs on an additional $267 billion in Chinese imports, which would affect almost every category of consumer goods, according to analysts. He cites unfair trade practices as a reason for the tariffs.
The company said the tariffs would "show up as a tax on U.S. consumers" and "increase the cost of Apple products that our customers have come to rely on in their daily lives." Beyond the core products, Apple said accessories like the HomePod speaker, some Beats speakers, AirPort and Time Capsule internet routers, the Magic Mouse and Magic Trackpad, and leather cases for the iPhone, iPad, MacBook and Apple Pencil would be affected. It said some of the parts it relies on for product development, including processors and research equipment, would also be hit by the tariffs. On Friday, President Trump said he's prepared to impose tariffs on an additional $267 billion in Chinese imports, which would affect almost every category of consumer goods, according to analysts. He cites unfair trade practices as a reason for the tariffs.
People will still buy them at the same rate they do now.
Apple's products are already too expensive as it is and then even more expensive than that with the current exchange rates, this can only mean even fewer Mac users in the future, which means even less software available for them.
Since Windows is a console OS, what's the best Linux/BSD alternative to macOS?
Great increases in cost!
Someone's got to pay for that tax break.
He gets a twofer in his mind: Look strong on Chin and punish silicon valley who he sees as his enemy.
I'm a consultant - I convert gibberish into cash-flow.
Iâ(TM)ve heard since I was in high school in the late 90s that China has been behaving poorly in international affairs. In my adult life Iâ(TM)ve observed both Bush and Obama do next to nothing about it. Trumps tariffs may not be the best solution but I have yet to hear anyone propose an alternative method to dis the issue. The WTO clearly didnâ(TM)t make things better for the USA. So if not tariffs then I ask what do we do?
I thought Apple toy's point /was/ being expensive?
The mac mini is very old and at an high price now if they jack the price up it better get new hardware
Apple are already getting skinned by selling their $5 dongles for $75. The whole board of directors would end up in poverty on the street if they had any smaller profit margins on their products.
... they are only related to the rate of Mana the believers of that cult can supply. I've seen hungry believers share one pizza because their money would not allow to buy one, each, while casually discussing how they save up for the new iPhone, even while their existing one still works fine.
Apple could maintain the same price in the US, it just would cut into their profit margin.
though Trump would profit from it.
passphrase === 'scornful'
The company said the tariffs would "show up as a tax on U.S. consumers"
It's not a mere appearance, tariffs are a tax.
"increase the cost of Apple products that our customers have come to rely on in their daily lives."
If you specifically rely on Apple products for your daily life then you have really fucked up by "putting all your eggs in one basket".
Anons need not reply. Questions end with a question mark.
Its a new source of income for the defense industry. They put a little something extra on everything we get from china and use that money to buy more weapons to replace older weapon that they can donate to local police. Its the circle of death and it can't be bad if it help out the man.
All apple computers are pretty 'old' although tbh generation to generation perf increases haven't been that awesome. may as well wait for designs w more hw Spectre etc. hw mitigations .
Prices: Yeah it'd absolutely destroy apple to have slightly lower profit margins.
We all know that Apple is operating on the thinnest of margins.
i find it rediculous that a company with a bazillion dollars in the bank cant eat most of the impact. geez, how much is enough for these companies?
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
You haven't been paying attention. Apple has announced that hardware refreshes are coming.
It could not have happened to a more deserving company!!
C'mone people this only affects fan boi's and the "rich" who support this single vendor abusive company anyway. the rest of us avoid this "new tax" people comp[lain about.
It's not like apple and apple users cannot afford a few more dollars for their shimmery NEW toys.
Ignore the apple and go android!!!
What a load of Apple crap: "... increase the cost of Apple products that our customers have come to rely on in their daily lives." Apple, stop buying from the ChiComms! Buy American!
Circle the wagons and fire inward. Entropy increases without bounds.
What exactly did you think tariffs would do?
Raise tariffs, raise taxes, increase regulation, they all get passed on to the consumer.
Apple makes luxury items. These are not "essentials" like baby formula or milk or veggies. It is called discretionary spending for a reason. You don't NEED it to live.
People buying Apple already pay about 50% more for the privilege. They are not cost sensitive, as proven by sales of the iPhoneX.
Apple will always get their 50% profit and 30% on App-Store crap.
I see no difference in taxing Apple stuff as taxing large boats over 20ft. Both are luxuries.
And taxing Google stuff would be fine too. All there stuff is a luxury.
Apple would be better off talking to Chinese officials about the need for a trade deal. Or Apple will have to shift some production out of a China.
Apple customers won't be freaking out and calling their congressman about paying an extra $10 to cover tariffs.
Fixing "unfair trade practices" is a common and vague request from Trump. I wish he'd define exactly what practices he feels are unfair and what would be acceptable solutions to him. This would be a great starting point for real discussions.
That said I doubt he wants to do that. As shown with his NAFTA re-negotiations he is just looking for a few changes he can make to a trade treaty and then claim victory. If he defined what was unfair to him that wouldn't work into his plan of just changing a few things for his voting based to believe he had given them.
So far it looks like China isn't being bullied like Mexico.
Has Apple trademarked the phrase 'hardware refreshes'? Because it's another example of slick terminology and they should get right on it.
My understanding of Apple product pricing is clearly flawed. Apple have always priced their products on maximising product margins; Not focused on market share. How can this possibly raise the price of any of Apple's hardware? All I can see is successfully taxing Apple who have worked tirelessly to pay tax nowhere in the world. Taxies that should have been going towards America's and others infrastructure; schools, roads, medical etc etc
I am also not sure why the iPhone is missing from the list of products, as its really its main profit centre. The accessories talked about are less technical(seriously cases), and could be made in America Trivially. Exactly what you want tariffs to do.
I notice that xiaomi don't have the same problem with market share/Tarrifs in India sine they now manufacture 95% of phones there...maybe Apple should follow suit. They laughed at Obama for suggesting manufacturing in America...They don't laugh at Trump.
Yeah, my college professor told me they just keep it in a giant Scrooge-McDuckian vault... just sitting there doing nothing, 100% liquid capitall
They absolutely don't, ignoring the fact they created bond's against it so Americans couldn't benefit from Hospitals and Schools. They will have an army of Accountants on phones lending large sums of money out against it, often for hours.
You got the timing backwards. China has had barriers keeping out American products for decades. We were already in a trade war. We are only now starting to fight back.
We accepted the one sided nature of trade with China with the hopes of liberalizing China through interaction. That failed. Its far past time to realize this and to stop tolerating the one sided nature of our trade relationship.
Trump may be an idiot, but he's having a broken clock moment and is correct here.
They'll find away to exempt some tech. Especially stuff like phones and TVs. Otherwise when our food prices are crazy and most people can't find a nutritious diet they'll be like but look they have iPhones and TVs that's the pinnacle of wealth
HA "hardware refreshes" to apple means more glue and solder holding down this years parts. We made least years parts too easy to replace.
apple will raise the price of phones to cover the tariff and add their 60% profit on the tariff as well. If you are stupid enough to buy apple products you deserve whatever you get.
How about working for half the money, like the rest of the world, and normalizing your prices. A phone with the same specs is $200-500 everywhere else, but cost $500-1000 in the USA. Same can be said for everything else, rent, healthcare, internet. Of course Apple will never produce at you, wages are ridiculously over-inflated.
I mean, apart from their overall 0.2% tax rate or what it was after juggling their business through tax heavens and whatnot. They'll probably find a way of weaseling around the tariffs as well while raising end user prices nevertheless.
I think with Trumps genius it wonâ(TM)t be long till we will have coal fired cars , using up that unused trunk space. Inovation has always separated America from the rest of the world , that and making friends thruout the world. China currently is helping the S hole countries with over 60 billion going to Africa as they progress and develop who do you think they will prefer to do business with.
whether it is our government or another government Will be passed directly through to the end user Whether that end user is another business or the consumer.
;)
Taxes, Tariffs, the Cost of Fees, Laws and Regulations, etc Why? because a business without a positive profit margin may not have a future.
A business can not manage a cash burn rate forever.
A business will try to keep it's profit margin stable or better yet growing!
Next point, why should Americas markets be open! If a trading partner does not keep their market open?
Why would anyone think that "We are free traders here in America so do what ever you want in our markets. And you can close, partially close, tariff away any of our goods in your market and we will just take the hit in our country?" Which is just what the American government has been doing for 50+ years.
Our current trading partners are shocked the issue is even coming up! They have been screwing segments of Americans for so long they even forgot someone was sitting on the other side of the table.
Just my 2 cents
Good! Keep raising the prices so the turnover rate goes down. We donâ(TM)t need new phones so often and Apple and suck it. They can afford it. Just cause their margins wonâ(TM)t be so gaping huge doesnâ(TM)t mean they have to raise prices.
And what is this liberal left wing horse shit. Every possible way to spin every story into your political view is exhausting.
Tsk-tsk-tsk. So, here I am, patiently waiting for Apple's going-out-of-business sale. Hurry it up, bitches.
...ah-HA-HA-HA! Who am I kidding. 50% margins on phones isn't good enough for Apple. They'll try to get it to 100% by 2020.
Apple should choose a different country to make its phones. All the cheap labor has never caused the lowering of prices. If it had, the price of housing in California would be the cheapest in the country due to the all the illegal labor.
I wonder how this trade war will end, given that the US borrows a trillion dollars a year from China and others every year just to function.
China needs to buy those US Bonds to manage its currency exchange rate. China is awash in dollars due to the trade imbalance. This would normally depress the value of the dollar in China and increase the value of the yuan. That would increase the price of their services and exports, decrease the price of US imports. Keep in mind, the savings experienced by manufacturing in China is not simply labor costs. It is basically everything is on sale due to the currency manipulations, raw materials, services, etc. A weaker yuan is needed to support this export friendly situation.
To keep the yuan low compared to the dollar China needs to get their dollars "of their books". Buying US Bonds does this. Its an accounting gimmick, but a legal and long established one.
You do understand that most smart phones are manufactured in China right? A tariff on China will affect your Samsung, HTC, Huawei, or LG phone the same if it is manufactured in China.
Phones are manufactured all over; famously to avoid tariffs Xiaomi manufacture 95% of their phones in India...Apple only have 1% and complain about tariffs there.
cheaper Apple shit for Canadians. Great!
America is the largest consumer market in the world. All this does is open the door for another American tech company to come in and beat Apple only this time they can use American tech workers to do it.
Not much else to say there.
Except that perhaps the future is not jeopardized in the least if tech bros buy new phones at a lower frequency and China has less revenue to build a blue water a navy. The cheap stuff from China model — enabled by disposable workers and piratical regulation-free manufacturers — is a shitty way to do things and any impedance we can offer is good. We can't trust China, Indie, et al. to perform our manufacturing without filling the oceans with plastic and emitting tons of illegal CFCs and all the other heinous shit they do, so let us unwind this sad, shameful arrangement.
Just more winning as far as I am concerned.
Maw! Fire up the karma burner!
Any price increases will only impact the USA, the rest of the world will continue with no changes.
They will raise prices so save margins. Then move production to US to save costs. Then if price hike had no impact on sales... do nothing.
I wish Apple had the balls to show us what the tarriffs actually cost. They should show their prices like:
Phone price: $999
Tariff: $100
Price you pay: $1099
J
I wish Apple had the balls to show us what the tarriffs actually cost.
They have spent years marketing "Designed in California" they would never promote "Made in China"
Any price increases will only impact the USA, the rest of the world will continue with no changes.
In the UK they do a $ for £...whatever you think of that, so if their was any price hike well be in the UK. I think it is dangerous for them especially as more people are buying off contract phones.
Are you faulting Apple for not trying to monopolize the entire market on smart phones and instead trying to earn as much profit as they can on the market share they have?
No. It does mean that its market share in massive markets like China ita share small and dropping, and in India is non existent.
You do understand how basic accounting works right? If the cost of a good increases, either profits fall or prices get increased.
Yes, as an accountant. I am saying profits will fall.
Well this is a bold faced lie. Apple does pay taxes. They just pay little taxes in some parts of the world. For example, I would consider the US a part of the world. Do you want to know what Apple paid in corporate taxes in the US?
lol, stop spreading fake news, and calling people liars, Apple deliberate do not pay for hospitals, and welfare...because they legally(sic) can...Ireland was famously forced to collect €13bn in tax from Apple. I hope they Apple pay you. Because their anti American policies are everywhere.
And that is irrelevant to Apple who is facing problems with US/China tariffs?
A company who has become the market leader when faced with the same problem with tariffs by manufacturing in that country is a working example it is possible to not only avoid tariffs, but benefit the local economy, and make it successful. You are saying Apple cannot do it...and I am fine with that.
Please show me where they "laughed at Obama". Under Jobs, Apple stated to Obama that they were not moving the majority of their manufacturing to the US. I don't see anywhere where Jobs "laughed".
Apple still sell their users to Google, so why is it so hard to find examples? I like this one
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,”
1. Apple commentators sometimes argue that Apple pricing is designed to maximise margins rather than market share. Unsurprisingly, Apple doesn't state its pricing strategy in public. Why would it?
They don't produce a $100 for the mass market they produce a boutique brand phone for $1000 at the cost of 85% worldwide market share. They do not keep it secret
2. In any event, the logical chain between "Apple prices for margin rather than share" and "therefore tax increases shouldn't lead to price increases" doesn't exist. Obviously, input costs affect final prices, even though final prices are affected by more than just input prices. This is Pricing 101.
Then you have never done any accounting. Please search brand equity Apple still sell Apple users to Google.
3. Apple is the largest corporate taxpayer in America. Maybe you want it to pay more, but if that's the case, what the fuck was the point of giving American corporations including Apple a massive tax cut earlier this year, which is going to balloon your deficit to unheard of levels?
They didn't create a bond to avoid paying any for hospitals and schools, and only paid after getting massive tax cuts. Next you will be saying the Irish sandwich was a myth, please stop spreading fake news.
4. The American economy may benefit from more Apple accessories that are sold in America being made in America, but it will also lose out when Apple margins and shares decline
Apple is anti-america, the fact that jobs might be created here, and tax that is harder to avoid paid is impossible to spin badly. Share price only affects shareholders.
It makes perfect sense that tariffs would raise prices on lower margin peripherals. There is less of a markup for the market to bear,
Except their peripherals look to have even higher margins...in a monster cable joke way.
Apple's prices are set to maximize profits. The cost has little to do with how much it costs to manufacture them.