Apple is about to be hard hit by Trump’s prices

Tim Cook may not be lucky this time: the prices of Donald Trump’s “Liberation Day” seem to be about to hit Apple Fort.

An executive decree for a long time planned by the president introduced a rate of 34% on Wednesday on the goods of the most important manufacturing center in Apple – China. It adds at a rate of 20% existing, which means that the effective rate rate on the country is now 54%.

China has long been its central center for the manufacture and assembly of everything, from iphones to macbooks. Prices are now threatening to increase the cost of apple products imported from the center of its supply chain universe.

Although radical prices are also about to hit other technological companies with tentacular supply chains – such as Tesla or Nvidia – this is a particularly important success for Apple.

Jamie Macewan, principal analyst at Enders Analysis, previously told Business Insider that he estimated that “almost half of Apple’s income were exposed to China thanks to direct sales and the supply chain”.

It is also a blow to cook, which spent years trying to build an united relationship with Trump. Apple CEO met the president for dinner in Mar-A-Lago in December, attended his inauguration in January and promised an investment of $ 500 billion in the United States in February.

Apple has made movements in recent years to diversify its China supply chain in the face of geopolitical tensions, but Trump’s samples even seem to decrease these efforts.

Apple countries have increasingly moved manufacturing and assembly operations to – India, Malaysia, Vietnam, Thailand and Ireland – have all been struck by prices higher at the Trump’s reference rate of 10%.

Although Cook has succeeded in guaranteeing an exemption for the company when Trump degenerated for the first time a trade war led by prices in 2018, in the state that things are not escaped from the last wave of prices.

Apple did not immediately respond to the request for comments from Business Insider.

The reality against Apple is already digested by the markets. Apple’s shares fell 7.4% in preheating exchanges while investors triggered a panic sale on fears of Trump’s implications.

In a note, analysts of the Citi investment bank have written that “if Apple cannot be exempt this time and assuming that Apple is struck by the accumulative prices of 54% of China and does not transmit it, we estimate around 9% negative impact on the total gross margin of the company.”

Jefferies analysts, on the other hand, wrote in a note on Thursday that in their worst scenario – one in which the 27 million iPhones manufactured in China and imported in the United States are subject to a rate of 54% – Apple’s net profit for the financial year could be reduced by 14%.

All this paints an image less than predominant for Apple and, potentially, its consumers. Without exemption, there could be more expensive iPhones on the way, Apple’s margins could take a hit – or both.