William Gallagher
Estimating the cost to Apple of paying President Trump's import tariffs, Bank of America believes that a 9% price hike for the iPhone and all other devices, would prevent losses.
It's a fiction that other countries will pay tariffs, as instead all such costs will always be borne by US companies. In the case of Apple, it has previously earned an exemption — though not consistently — and it has tried to reduce the impact of tariffs by moving manufacturing to different countries.
According to CNBC, this time that spreading of the manufacturing around various locations is not going to help. Bank of America now estimates that whatever Apple does with manufacturing, and wherever it does it, the company will face a minimum of a 10% tariff.
In the short term, Apple could absorb that cost and may well chose to rather than raise prices. Once a customer goes to Android because of the price, it is that much harder to get them back to the iPhone.
Should Apple simply pay the tariffs and take that hit itself, the Bank of America calculates that it would face a loss of 26 cents in earnings per share. That equates to a drop of around 3% across calendar year 2026.
One option is for Apple to increase prices, but not enough to cover its tariff costs. Bank of America says that if, for instance, it raised prices by 3%, that would mean a 2.4% slide and a per-share earnings drop of 21 cents.
The calculation is based on both the tariffs expected to affect goods or components made in various countries, and an estimate of how higher prices would mean lower sales.
If Apple passes on its increased costs to buyers, and sales decrease, Bank of America estimates that the company would need to raise prices by 9%.
As yet, it's not known what Apple will do, beyond presumably continuing to lobby for exemptions. But Bank of America analyst Wamsi Mohan says that the tariffs seem "manageable."
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Malcolm Owen
Christine McKee
Wesley Hilliard
Thomas Sibilly
Marko Zivkovic
Andrew O'Hara
Amber Neely
20 Comments
They will not have an effect because the CEO's are breaking their necks to rush to the White House to kiss the ring and get exemptions for their particular company - soooo, I don't seen an increase in the price (because of tariffs).
Oh well everyone likes to pay more for EVERYTHING, ESPECIALLY the people who elected Trump into office! Oh well for everyone who elected Trump into office I hope your ENJOYING the show everything that Trump is doing for everyone! Everyone was warned and all the signs were there that this is what was going to happen so I HOPE EVERYONE ENJOYS paying higher costs, taxes, fees, and oh the tariffs are great too! Just wait we (Americans) will have to pay for all these tariffs since there OUTSTANDING for everyone to pay, we need more taxes, fees, and tariffs to pay in the USA come on Trump, GREAT WORK!!!
Laying off hundreds of thousands of federal workers + gutting regulatory control + tariffs on major trading partners + yet another giant tax cut for the rich/corporations = another economic crash. It's just a matter of how soon it happens. It's also what the billionaire class is hoping for.
https://theweek.com/articles/460179/charts-how-rich-won-great-recession
Tariffs are only one factor in the multi-variate input to producer pricing. Importers may adjust prices and their suppliers, too. Disbursements of ERS income to citizens via tax cuts will allow consumers to more easily absorb higher pricing. In other words a x% import tariff may not necessarily lead to a consumer price multiplier of (1 + x / 100). We will just have to wait and see how it plays out.
At this point the priority is strengthening the domestic manufacturing base. This is important to the U.S. workforce, as well as strategically. In the case of a conflict with China, what use will cheap aspirin be, if it has led to there not being any functional chemical plants in the U.S., anymore, that make other important medications?
Let’s not bitch about a 10% tariff, when the last four years brought us > 25% inflation on groceries, which make for a much larger proportion of a family’s budget than an iPhone or two a year. For the one there are very well-reasoned economic policy drivers, for the other there were several very boneheaded and potentially intentionally destructive ones.