Kuo: Apple Can Reduce Impact of Trump's Massive Tariffs in Five Ways

[MacRumors]

U.S. President Donald Trump on Wednesday announced that massive tariffs will be applied to imports from many countries, starting April 9. The tariffs will significantly impact Apple's supply chain, with iPhones and other products imported to the U.S. from China, India, and Vietnam set to face 54%, 26%, and 46% tariffs, respectively.

Apple supply chain analyst Ming-Chi Kuo today said that if Apple does not raise prices, its overall gross profit margin could face a significant drop of 8.5% to 9%, due to the tariffs significantly raising costs. However, he outlined five ways in which Apple can reduce the impact of the tariffs on its gross margins going forward:

• Apple can boost iPhone production in India. Kuo said if India can secure tariff exemptions through new trading agreements with the U.S., and Apple boosts its iPhone production capacity there to over 30% of its global supply, the negative impact on gross margins could shrink to just 1% to 3%.
• Apple could raise prices on iPhone Pro models. In the U.S. market, Kuo said high-end iPhones account for 65-70% of new model sales, and he believes that "high-end consumers are relatively more accepting of price increases." So, the Pro and Pro Max models could see price increases, if absolutely necessary.
• Apple could increase carrier subsidies for iPhones.
• Apple could reduce trade-in values to partially offset the costs of tariffs.
• Apple could put even greater pressure on its suppliers to cut costs.

Apple's overall gross margin was 46% in the 2024 fiscal year. Gross margin is a profitability metric that indicates the percentage of money that Apple earns on a product like an iPhone after subtracting the costs of making the product. Even if Apple's gross margin drops below 40%, Kuo believes this dip "should be short-lived."

Apple's stock price dropped more than 9% since Trump's announcement.

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Article Link: Kuo: Apple Can Reduce Impact of Trump's Massive Tariffs in Five Ways

 

[miric]

I don't see any "Apple can reduce their profit and greed". 😁

 

[goodcow]

Tim Apple about to double SSD upgrade prices.

 

[brofkand]

I don't see any "Apple can reduce their profit and greed". 😁

Apple will absolutely never give up margin.

 

[TechnoMonk]

I don't see any "Apple can reduce their profit and greed". 😁

I don’t see any company or an individual who says, pay me less. Apple has duty to explore every legal avenue to maintain profits. Share holders will file lawsuits if they don’t do their due diligence. The funny thing is people will start complaining about their retirement 401Ks if Apple and other company stocks falls.

 

[arkitect]

• Apple could put even greater pressure on its suppliers to cut costs.

Wow.

How much more blood can you squeeze out of a stone?

By doubling down on the suicide nets?

SMFH.

 

[BelgianChoklit]

The orange dictator thinks these measures will make Amerika rich. Also, as if other countries won't retaliate with their own countermeasures. Allnof this because he mad that Europeans don't buy American cars, not realising or not willing to accept they just aren't good enough.

 

[KPOM]

Likely Apple will absorb the costs in the short term and raise prices with the next upgrade cycle.

 

[pksv]

I don't see any "Apple can reduce their profit and greed". 😁

 

[Gen]

Or we just get a new president?

 

[miric]

I don’t see any company or an individual who says, pay me less. Apple has duty to explore every legal avenue to maintain profits. Share holders will file lawsuits if they don’t do their due diligence. The funny thing is people will start complaining about their retirement 401Ks if Apple and other company stocks falls.

Is it a good time to complain? The market is totally red due to some red cap.

 

[ThatGuyInLa]

Apple is going to have to decide if their 600% markup for ram and hard drive upgrades are where they can carve out some loss to keep prices roughly the same after all of these tariffs and still make piles.

 

[Xavier]

Hopefully my phone will stay in working order for at least 4 more years, and when we get rid of this president.

 

[mystery hill]

6. Apple could increase the price of iCloud storage.

 

[goodcow]

Or we just get a new president?

That's over three years, and a likely constitutional crisis when he refuses to vacate the office, away.

 

[Belisama]

Don't worry, Tim Crook will find a way...
Everything becomes thinner at Apple, except greed and profit.

 

[Orange Bat]

I think Apple will just absorb the cost, at least for a while. They’ll have to live with lower profits for a few months, but I don’t think we’ll see any real change from Apple until they release new products in the fall.

 

[ramallite]

This administration is basing its economic policy on right-wing fantasies (which, by definition, is currently based on Bannon-driven reptilian instincts and not on actual high-level research), and it shows.

 

[ForkHandles]

10% slide on their share price already.

It’s time for Telling Truth to Power America.

Good luck with that.

Your president has just made Americans poorer, an absolute Looney Tune. He’s put tariffs on islands where the only inhabitants are penguins!!!!

Tim Cook needs to tell the world what the orange blob has done.

 

[EvilEvil]

Everything will be passed off to the consumer.

 

[canadianreader]

I wonder if for us Canadians iPhones are considered Chinese or U.S. imports

 

[DocMultimedia]

As the current person in charge says... Americans will just have to suffer with higher prices.

Bring on the $2000 iPhone.

 

[bluecoast]

‘Consumers are telling us that the 16GB of RAM that we’ve recently started shipping on our Macs, is just too much for them, so we’ve reduced it back to 8GB.

Upgrades are available at extortionate - sorry we main competitive - prices.

And we’re happy to announce that all iPhones are now shipping with 3GB RAM with similarly priced upgrades for people who actually want a usable iPhone’.

 

[mystery hill]

Bring on the $2000 iPhone.

The foldable is now going to be $4000.

 

[JordanCautious]

There’s another option though: Ask for an exemption from his ‘buddy’, which has happened in the past. The stock, as I’m writing this, is down -9%. In a single day 😳. Insanity.

I was planning to buy a M5 Max Mac Studio next year but it looks like I have to actually consider building a PC. In fact, I now have to reconsider all my Apple product spending and I’m guessing everyone else feels the same. If Apple raises prices, it might be over 🙅‍♂️