Last week, the Trump administration announced an extreme price plan on essentially all other countries in the world. This would make imports much more expensive and, therefore, Apple’s shares have dropped almost 10% to the news. Since everything on the Apple supply chain is based on strategic manufacturing abroad, it is a horrible news for the company.
However, Mark Gurman de Bloomberg exposes some ideas on how Apple could mitigate these prices.
First of all, Apple has not increased the basic price of the high -end iPhone from the iPhone X in 2017. It has always stayed at $ 999, and Apple would like to keep things in this way. Most Apple products have not had significant price changes over the past decade.
However, the president prevails over the rate threatens this. With 54% of prices on China, 26% of India prices, 46% on Vietnam and even more on other countries, this means that Apple cannot simply continue to sell its products at its current prices.
Certainly, some countries like Vietnam and India are actively working on trade agreements with the Trump administration, before the prices that start on Wednesday, April 9.
All this aside, Mark Gurman de Bloomberg exposes some ideas on how Apple can mitigate these rates:
- Push the manufacturers and manufacturers of components to provide better prices, allowing Apple to lower its manufacturing prices
- Apple himself eating some of the costs – he has a profit margin of around 45% on average
- Short -term price adjustments while Apple is in “evaluation mode”
- Continuing to diversify its supply chain, which will probably not imply manufacturing in the United States
As mentioned above, some countries establish trade agreements. China is not currently part of it. For Apple to continue to sell products at appetizing prices, he must considerably reduce his dependence on China.
In the meantime, Apple would have stored products in preparation for these prices. By mass import products before the dates of prices, Apple can continue to sell products at normal prices, at least for a little time:
The company has made another step to soften the blow. With many peers, Apple has been full of stocks for months in anticipation of prices. The units already on American lands are not subject to the samples. This means that Apple could theoretically hold back until the next iPhones in September to make adjustments, if it does. The main drawback is that the company may ensure that the price increases news – rather than its equipment upgrades.
Gurman specifies that Apple is ultimately afraid to increase prices, but the company will try to do everything it can to make the prices as little painful as possible. It is also possible that Tim Cook is fighting for an exemption, as he did during the first term of President Trump.
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