Wall Street analysts expect Apple to weather the costs associated with the U.S. government’s upcoming tariffs on Chinese-made goods.
Last week, U.S. President Donald Trump announced a 10 percent tariff on $300 billion USD (about $396.5 billion CAD) worth of Chinese goods will go into effect on September 1st, 2019.
However, renowned Apple insider Ming-Chi Kuo of TF Securities wrote in an investor note that he believes the Cupertino, California-based tech giant will not raise prices and instead “absorb most of the additional costs” in the short- and mid-term.
According to Kuo, “prices of hardware products and shipment forecasts for the U.S. market will remain unchanged” in spite of the tariffs. While the tariffs will certainly eat into Apple’s hardware profits, Kuo says the tech giant will “reap benefits in its brand image and relationships with suppliers.”
Further, Kuo expects Apple to redistribute part of its iPhone production to markets outside of China, thus lessening the impact of the tariffs. “The negative impact on Apple are limited and temporary because the profit from service business is growing, and non-Chinese production locations will gradually increase,” wrote Kuo. “We believe that Apple’s non-Chinese production locations could meet most of the demand from the U.S. market after two years.”
Analysts at the firm J.P. Morgan also don’t think Apple will raise iPhone prices in response to the tariffs. “We believe Apple is more likely to absorb all the tariff impact and not raise prices on iPhone shipments and other hardware devices into the U.S.,” the firm told CNBC.
It’s currently unclear what, if any, effect the tariffs and Apple’s subsequent business dealings may have on Canadians.