There is a good chance that Apple’s iPhone and Apple’s iPad are among the next groups of Chinese products affected by an import tax. The president of the United States, Donald Trump, has threatened to intensify the trade war between the US and China and to add tariffs to another 300 billion dollars in imports from China. The tax is paid by US companies like Apple and then transferred to US consumers. Some companies are consuming the cost of the tax to prevent the increase in retail prices; This is what Apple is doing with iPhone covers and cases made in China.
Apple designs the iPhone in the US but assembles them in China with a small percentage produced in India (mainly for local consumption), but this could change. It is said that the technology giant is thinking of moving from 15% to 30% of iPhone production outside China to countries like India, Vietnam, Mexico, Indonesia, and Malaysia. Contract manufacturers such as Foxconn, Pegatron, Inventec, Compal, and Quanta are believed to calculate the costs of moving production to these locations at Apple’s request. But there are some problems; three of the companies are against this movement and Foxconn denies that Apple has asked for a figure.
Moving iPhone production to other countries is not an easy or quick task to perform. Perhaps the most difficult thing is to ensure that production facilities have access to a nearby supply chain that can supply factories with parts and components in the quantity and quality that Apple wants.
China Aims To Resume Trade Negotiations With The US Government
Foxconn’s founder, Terry Gou, has what he believes is a better suggestion for Apple. The billionaire believes that Apple would be better off investing in Taiwan instead of moving production outside of China. And Gou should know everything about Taiwan; He is running for the president of the country. As a result, he is giving up Foxconn.
“Speaking from the perspective of the Republic of China, I will plead to Apple to come to Taiwan. I believe it is possible.” – Terry Gou, founder, chairman, Foxconn
If the trade war between the US and China intensifies and tariffs are imposed on the iPhone, Apple cannot pay the 25% tax on all units sent to the United States. Instead, you can expect a significant increase in prices for the iPhone and other smartphones imported from China. Morgan Stanley analyst Katy Huberty says the price of the iPhone XR will increase by $160 if the phone pays taxes. Both Trump and his Chinese counterpart, Xi Jinping, will meet at the upcoming G20 summit to be held next week in Japan. Tomorrow’s post from southern China this morning says that China’s economy has been stronger than expected in the face of a trade war. As a result, the Chinese can afford to take a harder position with the US. Although it does not want to be too difficult since the ultimate goal is to restart business conversations. The trade war is based on the interpretation of the US trade deficit by President Trump which considers the proof that China is taking advantage of the US.
In response to US tariffs, China is taxing $60 billion of the US products imported into the country. It has also produced a list of unreliable entities containing names of US and international companies that China could punish. This was done to retaliate against Huawei’s position in the US Department of Commerce’s Entity List. To prevent the manufacturer from accessing parts and software from the US.
Known as the Republic of China, Taiwan is no longer considered the only true China by the US government. On January 1, 1979, the US changed its diplomatic recognition of China from Taiwan to the People’s Republic of China. Therefore, any product imported into the US from Taiwan, it is not subject to tariffs.
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