May 14, 2019

Editorial: How Apple Struggles In The US-China Trade War

If you have been watch the Apple stock lately, you probably notice that the share keep goes down, with the company's price fell nearly 6% yesterday when it closes. This is largely due to the rising concerns of ongoing trade war between the China and United States. Last Friday, the United States announced that it would raise the tariff on the third batch of more than $200 billion worth of Chinese imports from 10% to 25%. In response, China officially announced on Monday (May 13) that it will impose tariffs on US imports of about S$60 billion. However, how will this impact Apple as a technology company?


Well, if you think about it, most US hardware companies rely heavily on trans-Pacific trade, but thus far, tariff hikes have been shunning the assembly of computers and smartphones, primarily for unbundled components that may have less impact on consumers end, though this does not mean that US companies are completely unaffected. In fact, it nearly strikes the Apple Watch and AirPods.

Nevertheless, accessories like the adapters, charge cables and chargers are on the list to be charged with tariff. Since September last year, such products have been subject to a 10% tax rate when entering the United States from China. The same is true for the state of the iPhone case, as well as the leather case of the iPad, and now the tax rate has surged to 25%. As of now, the price of these products hasn't been changed yet, which means the added cost is entirely borne by Apple and its suppliers, for Apple, they surely are only trivial things.

But what if the tariffs are also starting to hit iPhone and MacBook, then it won't be as easy as losing an only a small portion of the money as it did to the accessories. iPhone XS, for instance, will be $160 more expensive if Trump decided to impose 25% tariffs on them, which could naturally lead to Its 2020 earnings per share fell 23%. Now, that's the aftermath Apple need to handle it.

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