Apple Watch, AirPods, HomePods, & More to be Hit By 15% Tariffs

[jiyeon]

Source: 9to5mac | Techcrunch

 

Most Apple products are set to be hit by the 15% tariff following the trade war between the United States and China after Donald Trump lays down the hammer.

 

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Apple, the largest U.S. technology company by market cap, has its products assembled in China by Foxconn and then ships them to consumers all over the world. The Apple Airpods, Apple Watch and accompanying Apple Watch bands and the Apple Homepod are all products subject to the higher tariffs beginning Sunday. The iPhone doesn’t appear to be impacted this round, but could be subject to tariffs that begin Dec. 15.

 

On Apple sides of things, so far the confirmed list of products affected by the tariffs are as follows, with the iPhone being safe from the tariffs until the launch of the iPhone 11.
 

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• Apple Watch and Watch bands
• AirPods
• HomePod
• Some Beats headphones
• iMac computers

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The iPhone itself is spared from this round of tariffs but will face a 15 percent penalty starting on December 15th. This at least means that Apple avoids an iPhone tariff during the launch of the new iPhone 11 next month.

 

While it's not just Apple that it's affected by the tariffs, it does seem like the limelight is particularly on them due to using Foxconn in China as their main source of manufacturing. The tariff also means that because of this, Apple might want to keep an eye on their main competitor Samsung according to Techcrunch, presumably because Samsung manufacturers in South Korea and so can avoid this China tariff, in addition to being a South Korean company rather than an American company like Apple, at least from my understanding of the situation.

 

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Apple is hardly the only electronics company to be affected by the tariffs. TVs, speakers, digital cameras, lithium-ion batteries and flash drives are just a few of consumer electronics that will be subjected to a 15% tariff beginning Sunday. But the higher tariffs do threaten to give rival Samsung an edge.

 

Tim Cook, CEO of Apple, voiced his concerns about the competitive disadvantage that Apple will face compared to Samsung who will not have to pay the 15% tariffs, with Trump seemingly brushing off Cook's concerns.

 

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Apple CEO Tim Cook has pushed back against President Trump’s tariff plans. Cook had dinner with President Trump several weeks ago and argued that it’s unfair for Apple to pay tariffs, while Samsung does not. Trump said that he found Cook’s argument “compelling,” but whether or not it will result in any policy change is unknown.

 

Apple are said to either swallow the costs of the tariffs themselves or potentially raise the prices on the affected products to compensate for the 15% tariff.

 

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Analysts have predicted that Apple will likely absorb the cost of the tariffs, but it’s not out of the question that Apple could raise some prices to help account for the 15 percent hit. Gene Munster, an analyst at Loup Ventures, explained that a 15 percent tariffs on wearables like Apple Watch and AirPods “would likely reduce earnings by 5 cents to 10 cents a share per year.”

 

I'm way out of the loop on US politics - and frankly I don't want to involve politics or be involved in it anyway - but I find it interesting how confidently Trump has gone for this tariff without question, and how he has seemingly shrugged off Cook's concerns.

 

While I'm not a fan of how high Apple's markups can be, Apple is a business and as such deserve a fair fight against the competition. They're now forced to either suck up the costs or increase their prices, either is a lose-lose for them. Time will only tell what these tariffs do to not just Apple but American companies as a whole, and how well Samsung does in climbing further up the mountain of tech giants.

[Zodiark1593]

Are tarrifs applied to the end price, or are they simply applied to material and labour cost?

[Taf the Ghost]

1 minute ago, Zodiark1593 said:

Are tarrifs applied to the end price, or are they simply applied to material and labour cost?

Tariffs are applied to the cost when it hits a Point of Entry. Depending on the product and how it's qualified, a 15% tariff could really affect the actual consumer price by 0%. Most of the time the cost will be passed on to the consumer, normally around 1/2 of the tariff rate as a price increase.

 

Reality is that Apple will like move a lot of production elsewhere, as they've already started to do.

[ARikozuM]

Tariffs don't work. That is all. 

[The King of the Undead]

join me while we say

 

[Blademaster91]

3 minutes ago, will4623 said:

join me while we say

 

OOF

But seriously not like this hurts apple's consumers,they're used to overpaying for things and will still buy it anyway.

[Arika]

Just what Apple needs: a bigger price tag

[Suika]

49 minutes ago, sowon said:

The tariff also means that because of this, Apple might want to keep an eye on their main competitor Samsung according to Techcrunch, presumably because Samsung manufacturers in South Korea and so can avoid this China tariff, in addition to being a South Korean company rather than an American company like Apple, at least from my understanding of the situation.

My understanding of Samsung is that by taking advantage of the situation, they'll be raising prices the moment Apple does but reaping more profit from device sales because they aren't actually hit by the tariffs.

1 minute ago, Arika S said:

Just what Apple needs: a bigger price tag

And by extension, the rest of the industry.

[williamcll]

I wonder how other products are going to be taxed.

[Deli]

5 hours ago, huilun02 said:

China should just burn Foxconn to the ground and save their own people

Why? Foxconn manufactures stuffs not just for Apple, but many Chinese brands as well, like Huawei.

[dfsdfgfkjsefoiqzemnd]

@ Tim Apple :

 

This is easy to solve, sir.  Publicly announce that you plan to move the corporate headquarters abroad and shut down all Apple activities, stores, services and devices in the US until the annoying orange backs down. 

[suicidalfranco]

2 hours ago, huilun02 said:

Apple will just pass on the additional cost to end customers

The only downside is losing people who shouldn't be buying Apple products in the first place

 

I consider this a win

They'll just sell a kidney like that Chinese guy did to get an iPhone4

[williamcll]

10 hours ago, huilun02 said:

Well thats on him entirely I guess

Isn't foxconn in India these days?

[Flying Sausages]

Trump is about to bomb everything. Good luck for the next president going to fix all of this.

[Andreas Lilja]

2 minutes ago, OlympicAssEater said:

Trump is about to bomb everything. Good luck for the next president going to fix all of this.

Relax it's a 15% tariff. 

[Commodus]

2 hours ago, Andreas Lilja said:

Relax it's a 15% tariff. 

It’s more that it’s one part of a much larger headache.

 

At any rate, I wouldn’t celebrate if you’re an Anything But Apple sort — these tariffs will affect a whole swath of tech, and it only gets worse in December.

[Trik'Stari]

Good?

 

Apple deserves to get hit, for various reasons.

 

21 hours ago, huilun02 said:

Apple will just pass on the additional cost to end customers

The only downside is losing people who shouldn't be buying Apple products in the first place

 

I consider this a win

Isn't that everyone though?

[Commodus]

4 hours ago, Trik'Stari said:

Good?

 

Apple deserves to get hit, for various reasons.

Not like this, at least.  And besides, this screws over the Never Apple camp too -- you have to be pretty spiteful to hurt yourself and the broader US economy just to satisfy your rabid fanboyism.

[Blademaster91]

8 hours ago, Trik'Stari said:

Good?

 

Apple deserves to get hit, for various reasons.

 

Yeah, and Apple are the ones being spiteful here, instead doing the right thing by taking out some of their untaxed profits to eat the cost they would rather screw their consumers by passing on the cost.

[Commodus]

28 minutes ago, Blademaster91 said:

Yeah, and Apple are the ones being spiteful here, instead doing the right thing by taking out some of their untaxed profits to eat the cost they would rather screw their consumers by passing on the cost.

Apple hasn't actually changed prices at this point.  You can get angry if and when Apple does something, but railing against them for something they haven't even done says more about you than the company.

 

Also, shouldn't we mainly be angry at the dunderhead who's putting companies in this position over a pointless and damaging trade war?

[Zodiark1593]

14 hours ago, Commodus said:

It’s more that it’s one part of a much larger headache.

 

At any rate, I wouldn’t celebrate if you’re an Anything But Apple sort — these tariffs will affect a whole swath of tech, and it only gets worse in December.

Wonder if Apple can negotiate suppliers/assemblers to take on some portion of the tariff?

[Commodus]

1 minute ago, Zodiark1593 said:

Wonder if Apple can negotiate suppliers/assemblers to take on some portion of the tariff?

Not counting on it, though I have heard that you don't always see companies reflect the full tariff in their pricing even if they do pass the costs along to customers.  The actual relationship of  the tariff to the final product price can be complicated.

[Blademaster91]

Well you can defend Apple and throw shade at me, whatever, but the price increases are inevitable unless Apple wants to do something about it.  They can either move manufacturing or an even easier choice would be to suck up the cost.

And no i'm not going to take the bait with that political argument because its against the CS here lol. Apple are the ones that begged to get an exemption from the tariff as if its gonna hurt a company with over 200 billion in cash.

[kaiju_wars]

20 minutes ago, Blademaster91 said:

Well you can defend Apple and throw shade at me, whatever, but the price increases are inevitable unless Apple wants to do something about it.  They can either move manufacturing or an even easier choice would be to suck up the cost.

And no i'm not going to take the bait with that political argument because its against the CS here lol. Apple are the ones that begged to get an exemption from the tariff as if its gonna hurt a company with over 200 billion in cash.

They're not really defending Apple as much as telling you to chill.

We don't know what Apple is going to do yet, because they haven't done it yet.  They simply stated what products it will affect.  Until then, bashing Apple for doing something that you think they might do comes off as rabid fanboyism, regardless of your intentions or not.

Analysts are even stating they think Apple will absorb the costs.  Again, that's what they think, and no one truly knows till Apple does something.  But analysts at least have some form of insight.

Basically, you jumped to conclusions, and you're arguing in your own head as if Apple has done it. 

[Donut417]

2 hours ago, Blademaster91 said:

They can either move manufacturing or an even easier choice would be to suck up the cost.

Ok. So they move manufacturing back to the US, and prices go up because US workers dont work for a bowl of rice and 2 fish. That is why manufacturing is dead in the US, we command better wages. No company is going to eat the cost, a business job is to make money. 

 

Also keep in mind guys Apple is not the only thing affected by these trade issues. My aunt works for a company that arranges and transports things around the US and world. Some of the clients such as GM and Ford build shit down in Mexico. A while ago she was looking at a lay off due to trade being an issue. Hell the place that I work is affected by these tariffs. They posted an email on our board that went out to the customers. Letting them know that some of the products manufacturing were moved to countries not affected and other products would be having prices increased. 

 

The fact is this is not directed at Apple, this is two grown men having a dick measuring contest. Because Tump thinks he can strong arm China. Which is not going to happen.