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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.
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.
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
... 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.
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.
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.
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.
Maybe. You know who would pay for it? People who own Apple stock, which would be pummeled when lower profit numbers were released. And yes, this probably includes you whether you know it or not through funds you may have in retirement plans.
The Trans Pacific Partnership was supposed to deal with China's stealing intellectual property, but of course Trump killed that deal, didn't he?
I've abandoned my search for truth; now I'm just looking for some useful delusions.
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.
The display cabinet purpose of the TPP was to 'deal with China stealing IP.' The actual purpose was to ratchet down environmental and worker protection laws in the U.S. to 'level the playing field.'
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.
A short list:
Currency manipulation.
Forced technology transfers.
Forced local partnerships.
Predatory pricing.
IP theft.
Industrial espionage.
Subsidized state-owned enterprises.
Export subsidies.
Regulations designed to bar foreign products.
etc...
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.
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
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.
Apple products are just going to continue to get worse. The last good (read: customer focused) iPhone was the 6S. Nobody was asking for the headphone jack to be removed. It was a move that was motivated solely by profit. Bluetooth sounds awful if you have a half way decent stereo or set of headphones. The UI has been ugly since iOS 7 and Macs are about to become far less useful when they switch to ARM processors, again a move solely focused on profits and not the interests of the customer. Appleâ(TM)s only saving grace on mobile is the current CEO respects privacy. If he leaves, they potentially lose that as well. On the desktop, demand will fall because few want a computer that doesnâ(TM)t do anything particularly well, and Intel CPUs can already get you through 12 hours of normal use.
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.
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.
This list is an excellent example of how a little knowledge is a dangerous thing.
At least five of those practices are not only not unfair trade practices per se, they are also practised extensively by the US, which understandably regards the ability to do these things as the rightful exercise of power by a sovereign nation.
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
This list is an excellent example of how a little knowledge is a dangerous thing. At least five of those practices are not only not unfair trade practices per se, they are also practised extensively by the US, which understandably regards the ability to do these things as the rightful exercise of power by a sovereign nation.
Yes, a little knowledge is a dangerous thing, as you just demonstrated by failing to consider the scale of the practices involved. Plus you also fail to consider that the sovereign nature of China's actions do not justify keeping our policies open, and that we are talking about a reciprocal response not bombing them.
Reciprocity is at the core of Trump's approach. If you are open to us we will be open to you, if you erect barriers we will erect barriers.
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.
The scale of the practices involved?? Are you shitting me? The scale of US subsidies for its industries vastly exceeds the scale of subsidies in China (and every other country in the world).
You listed a bunch of things you said were "unfair trading practices"; now you appear to be describing China's use of them as unfair, but America's as fair because you do it less, and they did it first. This is no way to work through an argument.
You and I didn't discuss whether it was sensible for Trump to do these things. The OP did that, to a degree. You just listed a bunch of things you claimed were unfair trading practices and I disagreed.
The scale of the practices involved?? Are you shitting me? The scale of US subsidies for its industries vastly exceeds the scale of subsidies in China (and every other country in the world).
You are woefully ignorant.
"The local government has proved instrumental, doling out more than $1.5 billion to Foxconn to build large sections of the factory and nearby employee housing. It paved roads and built power plants. It helps cover continuing energy and transportation costs for the operation. It recruits workers for the assembly line. It pays bonuses to the factory for meeting export targets. All of it in support of iPhone production."
https://www.nytimes.com/2016/1...
You listed a bunch of things you said were "unfair trading practices"; now you appear to be describing China's use of them as unfair, but America's as fair because you do it less, and they did it first.
Nope. I'm saying that a checklist perspective is a naive and inadequate perspective. The magnitude also needs to be gauged when considering whether a "predatory" line has been crossed of not.
You think 1.5bn is a significant subsidy? Seriously? You are so sweetly naive. Go check out the level of support for, say, Boeing or Exxon. Or the last Detroit bailout.
Sheesh.
That is just one example and it demonstrate that China is going far beyond tax breaks and is involved in ongoing operations and is assigning production quotas to meet a larger national goal. This is a scale and a level of coordination far beyond anything going on in the US.
You're right on one count: it's just one example. You're wrong to say it "demonstrates ... a scale and level of coordination far beyond anything going on in the US". I mean, you are so badly, badly wrong it's hilarious. Just as a little reminder, the Bush and Obama administrations lent the US auto industry $80bn to prevent bankruptcy. From 1950 to 2010, the US has spent $837bn in direct subsidies for the energy industry (obviously, this doesn't include the cost of wars to keep oil flowing). On a much much smaller scale I personally remember, when I worked for a global professional services firm, a healthcare engagement for the state where the team being staffed had to be all American because of procurement requirements it imposed. (It was quite clear to us as a firm that this meant the team was substantially less strong than it would otherwise have been, because there were non-US people with much more experience that was relevant. But the firm was OK to jump through that particular hoop to win the business)
My point here is this: China may be doing all the things you say it is, and more besides. Many of these things may be bad things from a political, moral or economic perspective. But it does your analysis no good at all if you deny the obvious, which is that the US (along with just about every other country in the world) has done and is doing many of the same things, as the same scale and intensity. Because sovereign nations often run industrial and trade policies that are activist.
The ongoing Chinese involvement in operations and the participation in a national plan of action is far grander, more integrated (govt/priv), and more supervised that in the US. Its taking things to an entirely new level.
That one example is not an outlier. Such actions are part of a national plan of action and common. The US auto bailout was a one off event, unlike the Chinese actions with respect to this one Foxconn plant.
Plus we haven't event gone near the forced partnerships, the forced technology transfers, the state owned enterprises, etc. Your assertion the US is similar in operations is ludicrous. China takes things to a higher level. The US Congress giving their contributors in the oil industry tax breaks is something far different. Get back to me when the US gov't builds the oil platforms, staffs the private company that will operate the platform, directly monitor operations, set production quotas and reward/punish as quotas are met or missed.
I think much of the negative reaction to the TPP was due to them trying to keep the actual text of the treaty secret. Openness and transparency would have helped. None of us really had a chance to analyze the pros and cons of the agreement, and uncertainty triggers fears. I don't know enough about it personally to say whether it would have been good or bad, but my understanding is it would have given us some tools to use against IP theft.
I've abandoned my search for truth; now I'm just looking for some useful delusions.
Um. Are you actually suggesting US gov't involvement in oil is less extensive than Chinese gov't in tech? Did you miss the wars fought to protect oil supplies? etc
Look we are obviously not going to convince each other. I suggest we end this, it's fruitless
And now that China has external supply lines they are reorganizing and rebuilding their military so that they can defend those supply lines. Plus they are engaging in quite a bit of neocolonialism in the acquisition of those resources.
The fact that you have to conflate such national security interests with trade policy is a great example of how vacuous your position on trade is. Yes, a fruitless conversation with respect to convincing you, but in case another is reading there is value in not letting your misrepresentations stand.