Apple could take a multi-pronged approach to soften the blow of looming tariffs on its products, according to Bloomberg‘s Mark Gurman. The new tariffs pose several challenges to the company, as President Trump’s tariffs not only affect devices coming in from China, but also other countries Apple has diversified their production to.
In addition to a 54% tariff on devices from China, iPhones and AirPods from India face a 26% tariff, Vietnam (makes AirPods, iPads, Apple Watches and Macs) is hit with a 46% tariff, while other countries in Apple’s supply chain are facing tariffs ranging from 20% and 37%.
Gurman believes Apple will take a multi-pronged strategy to mitigate the impact of the tariffs. First, he says the company could put pressure on its component suppliers and assembly partners to lower prices. Second, Apple may choose absorb a portion of the increased costs. Apple has a bit of wiggle room there, considering its typical hardware profit margin of approximately 45%.
Third, and most impacting for consumers, Apple could make price adjustments to the iPhone lineup. “I expect that Apple will seriously consider iPhone price adjustments,” writes Gurman. “It helps that consumers have probably heard about the outside factors here and won’t see it as a cash grab.”
Last but not least, Gurman expects to see Apple step up its supply chain diversification efforts. While shifting production to the United States would be a time consuming process, Apple could reduce the tariff hit by routing more iPhones from India and other devices from countries rather than China.
iPhone buyers won’t see an immediate jump in prices after the tariffs take place on April 9, as units already in the United States will be exempt from the tariffs, and Apple has been stockpiling inventory in the country for several months, in anticipation of such tariffs.
Unfortunately for Apple, company CEO has not been able to cultivate a good relationship with President Trump, despite making a donation to Trump’s inauguration fund, attending said inauguration, and promising that Apple will make $500 billion in U.S. investments over the coming year. So far, the government has turned a unhearing ear to Apple’s overtures for tariff exemptions.
