President Donald Trump on August 1, announced via Twitter that there would be 10% tariff on the remaining $300b of Chinese goods entering into the United States from China.
As the Trump Administration makes good on this threat, Apple will be a big loser. The new tariff is not good news for American consumers. Everyone is affected, including American firms. Everyone is indirectly bearing the brunt of the pain caused by the trade war. The goods include laptops, smartphones, toys and other technology. Unfortunately, consumers in America will have to pay more everyday items such as toys, electronics and mobile phones.
Apple shares fell about 2% after the announcement. Technology Analyst, Dan Ives of Wedbush Securities said that Apple sales could plunge by between 6million and 8 million In the United States which would further cut earnings by 4% in 2020.
Dan Ives called the tariffs a “gut punch for Apple” The tech firm is clearly caught in a crossfire between Washington DC and China. It has been hit hard the most by the unending tariffs caused by the trade war. The tariffs increase the cost of iPhones globally leading to a plummet in sales. As at Thursday last week when the announcement was made via Twitter, Apple’s stock fell by 2% and by another 1% on Friday.
If the tariff continues to soar, iPhone users will be left to pay more and only the loyal ones will stick to the brand, because delaying their purchase is enough reason to find an alternative brand.
Ives argues that should the tariff continue to soar, Apple may likely move 5-7% of iPhone production to India and Vietnam, but the company cannot abandon China totally; this supply chain process, however is slow-going.
The timing of this tariff comes at a rough time for Apple when the company just managed to grow its business in the face of a 12% decline. Wall Street had commended the effort of Tim Cook who said in a report that Apple “couldn’t be happier” with its progress in China’s market, where it’s still scrambling to gain loyalty from customers over there.
As long as the trade war continues to drag, Apple will continue to bear the brunt of the pain. President Trump tweeted last week that Apple will not be exempted from the tariffs on part of the Mac Pro, which Apple said it’s building in China.