Trade war could force the price of the Apple iPhone XR to be hiked by $160 says analyst

Trade war could force the price of the Apple iPhone XR to be hiked by $160 says analyst
As reported today by the BBC (via AppleInsider) the White House announced this morning that it has increased tariffs on $250 billion of products imported from China to 25% from 10%. Since Apple devices were not on the original list of affected products, the company continues to escape any direct hits from the U.S.-China trade war (more on that later). However, what happens next will decide whether U.S. consumers end up paying more for their iPhones. The president has said that he would hit another $325 billion of Chinese imports with a 25% tax if the two countries can't come to an agreement. That group of products would most likely include the iPhone.

While Apple designs its products in the U.S., the actual assembly is done in China by companies like Foxconn and Pegatron. Thus, these devices are considered to be imported from China. Apple does have some manufacturing options in other countries, including India where it produces the iPhone 6s and iPhone 7.. But it probably would result in a huge production cut, and might not totally get Apple off the hook. After all, the company sources some parts from China.

In what might be considered good news for Apple, a tweet disseminated by the president this morning indicated that he is in no rush to add the additional tariffs. Trump wrote, "Talks with China continue in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products." We should point out that the last part of the tweet is factually incorrect. No money is being paid by China to the U.S. as it is American consumers and businesses that must absorb the tax. And that means that if Apple does get included in a new round of tariffs, the company would have two options. It could leave the price of the iPhone as is and take a hit to its margins, or raise the price of its phones by the amount of the tax. Morgan Stanley's team of analysts led by Katy Huberty says that if Apple is included in the next wave of tariffs, the iPhone XR could see its price raised by $160 in the U.S. Huberty says that this could not only hurt demand for the phone, it would also stretch out the already rising upgrade cycle.

Apple is getting hurt by the weakness in the Chinese economy, which is an effect of the trade war

During the campaign and into his presidency, Trump has tried to get Apple to move some of its production to the states. Last September, the president tweeted "Apple prices may increase because of the massive Tariffs we may be imposing on China-but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting!" In July 2017, Trump said he was told by Apple CEO Tim Cook that the company was planning to construct "three big plants, beautiful plants." Sounds good, but Apple denied that the exchange between the two executives ever took place.

While Apple hasn't directly been hurt by the tariffs, it has suffered from the weakened economy in China that is a result of the trade war. During Apple's fiscal second quarter, which covered January through March, the company saw revenue from China decline 22% from $13.02 billion to $10.22 billion on a year-over-year basis. Besides the trade war, Apple was hurt by the strength of the U.S. Dollar against the Chinese Yuan. This forced the company to hike iPhone prices in the country to maintain its margins. As a result, in China, the "more affordable" iPhone XR was priced higher than the Huawei Mate 20 Pro. Eventually, Apple cut its wholesale prices in China and cut its retail prices by up to 6% last month. But that second price cut was made after China dropped its value-added tax (VAT) for manufacturers to 13% from 16%.



1. LawnBoy

Posts: 197; Member since: Feb 23, 2019

Don't worry. Isheep will still buy them

2. OneLove123

Posts: 1177; Member since: Aug 28, 2018

So true.

14. sgodsell

Posts: 7433; Member since: Mar 16, 2013

Lol, a hike of $160 for the iPhone XR which only has a HD+ LCD display that doesn't support HDR, only 3Gb of ram and 64 GB of base storage. It doesn't even ship with a headphone jack, or fast charger and cable to match. This has to be a joke, because the XR is overpriced right now. Look at Google's Pixel 3a has released for $399, it has superior cameras over the iPhone XR. Has a superior full HD+ OLED display that supports HDR. It even has the Pixel Core and Titan Security chips on board. Plus it comes with a headphone jack, USB-C cables and fast charger in the box. Personally I think Apple is doing this scare tactics to get more people to buy iPhones. Especially when Apple has shipped only 36.4 million iPhones for Q1 2019. I would be really surprised if the iPhone XR was an additional $160, and that would push the iPhone XR to $910 USD. That is laughable.

15. sgodsell

Posts: 7433; Member since: Mar 16, 2013

In Canada the XR at launch was $1030 CAD, which is not worth what Time Cook stated. The iPhone XR has great value, my @$$ is the XR great value. I guess that is why Apple's sales are tanking. That and their services are overpriced as well.

16. iloveapps

Posts: 855; Member since: Mar 21, 2019

What is laughable is that Xr sells more than any android product. So basically your outdated and overpriced trolling doesn’t help. Its the software and hardware that makes the price of apple. Your android cheap flagship products had really good spec and yet they don’t come close to apple’s quality and services.

22. OneLove123

Posts: 1177; Member since: Aug 28, 2018

they sold like 4.6mil xr. Quality? Like? Cheap screen is quality?

26. sgodsell

Posts: 7433; Member since: Mar 16, 2013

No what is laughable is how you honestly think that Apples iPhone XR sells more only because it's the cheapest of the new iPhone choices. Which is literally choice A, B, or C. If C is the iPhone XR, then your only choice is to get it on a subsidized contract, or buy it outright at Apple's overpriced asking price. It's priced at $750 USD, but every where else in the world the XR is a lot more. In Canada it's $1030, EU it's €800+, Australia its $1100. Apple knows that if you want an iOS device with phone capabilities, then Apple has purposely limited their customers choices. If you cannot see that, then your an iDiot. Does the iPhone XR have good hardware? No way. The screen by far is the most important thing on any smartphone, period! However Apple purposely cheaped out on that, especially since it's a low resolution LCD display, that doesn't support HDR. You can buy $100 Android smartphones with higher resolution displays than the iPhone XR's POS screen. It doesn't even have 3D touch, which Apple use to call that the next best thing to slice bread. It's water resistance is only IP67, it has 3 GB of RAM, with a base of 64 GB of storage for it's asking price. Plus it has no headphone jack, or audio dongle, and no fast charging. All of which Apple knows too well, that if you want those items, then Apple makes even more money. Look at the end of the day Apple only shipped 36.4 million iPhones globally for the first 3 months of 2019. Huawei shipped 59 million, and Samsung almost 72 million. Xiaomi is now close to Apple in terms of global shipments. If Apples XR was so great, and was great value, then wouldn't you think Apple would have been much closer to last year's iPhone shipments of around 52 million? That's a drop of 15.8 million for Apple. No other OEM even came close to Apple's total loss. But clearly you are going to pump up Apple no matter what. Now do yourself a favor and check out idc Q1 2019 smartphones. You will that I have stated facts.

3. TheOracle1

Posts: 2331; Member since: May 04, 2015

As if Apple needed an excuse!

6. GalaxyLeads_iCrapFollows

Posts: 216; Member since: Nov 29, 2017

I'm loving this trade war. Will love to see dumb ispheeps continue to blow money on outdated apple hardware. Smarter isheeps will start considering Samsung phones. Far better quality and hardware is much ahead of the competition for a bargain price. I'm sure once they go Samsung, they will know how wrong they were sticking with Apple all those years. This trade war is helping a lot of ignorant people open their eyes.

4. chris2k5

Posts: 281; Member since: Nov 17, 2012

Apple isn’t the only one making phones in China...Samsung and Google make flagship phones in China too. Their prices will increase.

9. jacky899

Posts: 431; Member since: May 16, 2017

Apple phones are almost entirely made in China, whereas less than 1/3 of Samsung’s phones are made in China and that number is shrinking rapidly as Samsung have been expanding their manufacturing to poorer third world countires because even China labor is too expensive for them. That way Samsung can maximize profits and get another upper hand against Apple. Apple and Foxconn really need to start looking at training and creating a highly skilled manufacturing sector in other countries outside of China to stay competitve. Developing countries like Mexico, Vietnam, and India where the salary is lower than China and with less government restrictions on environmental pollution would be great places to set up shop.

11. User123456789

Posts: 1001; Member since: Feb 22, 2019

Xiaomi has factory in India. Sony has factory in Thailand.

17. chris2k5

Posts: 281; Member since: Nov 17, 2012

Foxconn already has plants in Malaysia, Singapore, Thailand, Philippines to manufacture iPhones if capacity is needed. This notion that Apple is purely all China is ignorance. Samsung and Google produce just as much in China. Samsung actually does all phone assembly in China. Only displays and SOC are assembled in South KoreA.

21. Gamas_K

Posts: 88; Member since: Nov 02, 2013

Samsung don't do all assembly in china. They have others plants at Vietnam, India, Indonesia and some other asia country for manufacturing, especially in India and Indonesia where they can make their price a bit lower because they don't have to import their phone from other country

24. jacky899

Posts: 431; Member since: May 16, 2017

Samsung does all their phone assembly in China? You better check your facts before you post unless you want to sound like Donald Trump

5. oldskool50 unregistered

Tariff's are going to help kill the iPhone. Look how much they cost without them. Still no one has an answer as to why iPhones cost more outside the US, than other phones sold at the same price. Apple should pay their own tariff's. But then that wouldn't be the American way. The American way is to pass off as much of your cost to the consumer.

7. Whitedot

Posts: 825; Member since: Sep 26, 2017

It's always China but the apple to blame for the weak sales. Isn't it easy?

19. chris2k5

Posts: 281; Member since: Nov 17, 2012

Apple weak sales this year surpasses Samsung in their strongest year. No need to worry about Apple struggling :)

27. Whitedot

Posts: 825; Member since: Sep 26, 2017

Just worry not weak sales in China will be balanced by a larger margin in western market while value for money gets weaker year by year. I think one who struggles will be regular fans that will shelve out a months of salary for they next iphone.

8. Plutonium239

Posts: 1231; Member since: Mar 17, 2015

Apple should be able to easily absorb the costs of the terriffs at current price. Will the profit be smaller? Yes. But it should be easily doable, unless they don't care about passing the cost onto their isheeple.

12. User123456789

Posts: 1001; Member since: Feb 22, 2019

Let's suppose that an iphone Max costs $600 to Apple. Current 10% is $60. Then 25% is $150. No way they keep same prices from last year.

28. Plutonium239

Posts: 1231; Member since: Mar 17, 2015

I never said they would, I said they could if they choose to, but they are obviously too greedy for that.

13. Romantico3pe

Posts: 179; Member since: Sep 14, 2015

Lol apple will always be better than android, updates are always on time and for 4 years plus, even though i have an android phone the experience is not the same

20. iloveapps

Posts: 855; Member since: Mar 21, 2019

Certainly true but fandroids can’t accept that fact. They always look on overpriced and outdated spec. Short term only while iphone is for long term investment. You can still trade an iphone for a decent price whereas the value of android depreciates abruptly.

23. TechNeck

Posts: 655; Member since: Aug 29, 2014

Outdated? That's pretty laughable looking at the XR's specs.

25. mootu

Posts: 1527; Member since: Mar 16, 2017

"They always look on overpriced and outdated spec." Thats odd because thats what Apple is known for at the moment, even by their own customers.

30. oldskool50 unregistered

The Galaxy S7 was $750 3 years ago when it first came out. 3 years later, Apple makes a phone with a bigger screen, but smaller battery, 1/3 the resolution, no headphone Jack, no fast charging/er, no FPS and ctappy cameras that still suck in low light. No one cares that you get a few dollars more trading in an iPhone. Android phones ate more readily avail, this pushing prices down faster. But to show how ignorant what you saying is. A 3 year old iPhone may fetch more money, but. 3 year old flagship Andrpod may cost less, but it will be a better specd phone. There is no product made in the world that you pay more money and get less vs competition. When I sell my phone, I on average get 60% of it's original retail price 12 months later. I dont keep a phone more than 12 months. When I sold our Note 8's, I sold them together with one Samsung pack, which included 250GB SD card and a faster wireless charger and AKG OTE headphones for $1300. That's $750 per phone for a phone i paid $900 for year prior. You dumb bruh. You brag about things that dont matter. Getting a better phone 2 or 3 years later at a lower cost that an iPhone is a good deal. The iPhone 8+ is fetching about $280 while an S7 edge Is fetching roughly $50 less. For $50 less, you get a better looking device with far and away better specs and capabilities. I rather take the lower cost and better specs. That's how you get rich son. You get more value for every dollar spent. Not just buying expensive because one can.

31. Habib111

Posts: 45; Member since: Feb 12, 2019

Hey guys don't worry about the trade war do as you all like buy whatever you want because these cold wars won't get us any benefits from either side

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