Apple mulls iPhone price hikes, avoids blaming tariffs: WSJ
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The news: Apple is considering increasing the price of its iPhone lineup for autumn, coupling the hike with new features and design changes as the company seeks to avoid attributing any price increase to the US tariffs on goods from China, the WSJ reports.
The numbers: Shares in Apple surged as much as 7% to USD210.51 ($329.44) in premarket trading in New York as investors returned to big tech stocks that are reliant on Chinese manufacturing, before paring gains to USD198.53 by mid-morning.
The context: The US and China made “great progress” in their negotiations to substantially lower reciprocal tariffs in Geneva over the weekend. The agreement will see the US cut tariffs on Chinese goods to 30% from 145% for 90 days while China will lower levies on US goods to 10% from 125% for the same period.
While US President Donald Trump had exempted smartphones and other electronics from reciprocal tariffs on Chinese goods, Apple has remained under pressure as the trade war threatened the tech giant’s supply chain. Apple chief Tim Cook built up inventory in March before the tariffs were rolled out and pushed manufacturing for the US market from China to India. The majority of iPhones shipped to the US in the April to June quarter would come from India, Cook had said.
However, the infrastructure and technical capabilities of the Indian factories are not sufficient to support mass production of Apple’s most profitable iPhone models, meaning that Chinese factories will continue to build the bulk of production, the WSJ reports.
Apple is likely to have trouble making up for the China tariff costs by seeking savings from suppliers, resulting in the price rises. Cook has said the company expected current tariff policies would cost Apple USD900 million in additional costs in this quarter.
Sources told the WSJ that Apple executives are extremely reluctant to blame the price rises on tariffs as it would be negatively received by the Trump administration. In April, when a news report emerged that Amazon would show the impact of tariffs to its shoppers, the White House called it a hostile act and Amazon immediately quashed the idea.
The source: Wall Street Journal
