We think that Twitter is a social network where we release our thoughts and little else but the truth is that u n tweet can have a lot of power or at least those published by Donald Trump himself in his personal account. Last night the president of the United States published a tweet that has caused panic in the economic world causing the stock markets around the world to collapse and of course, it also affects companies like Apple.
The content of this tweet is a statement of intent by the president in which he says that from this Friday higher tariffs will be imposed on products from China from 10 to 25%, something that intensifies the trade war between the two economies.
As we say, until now the duty rate was 10% but Apple did not have to pay it for iPhone and other products manufactured in China as they were totally exempted. This may end up changing with Donald Trump’s latest decision which will make Apple make some radical decisions to avoid having to raise the price of its products.
The problem with the tariffs is that in the end we pay them the consumers as the companies will not be willing to absorb this new rate in full because their net profits would be reduced at the end of each quarter. If Apple’s products start to go up 20%, who will end up buying them? Cupertino’s company wants to avoid this and that is why there are several reports that say that Apple would consider moving the production of its products outside China now that this rate exceeds 25%.
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Moving all of Apple’s manufacturing from one location to another is tremendously complicated, slow, and expensive . Many suppliers are required to manufacture a device and if one fails the device cannot get through. The idea of moving this production to the US as Trump wants is impossible as production costs will skyrocket and the price of the devices will still rise to unsaleable values.
In addition to these problems, analysts say China’s retaliation against Apple will be major. Although there are reservations about key components of the iPhone and the Apple Watch, the truth is that in the long term these Chinese retaliations could be a very serious problem.
De moment or many think that this message is a simple provocation but that on Friday we won’t see this rise in fees. Experts believe that this strategy is quite risky as we see how the world’s stock markets are suffering. But if Apple complies they will have to consider moving production to India.
Do you think we’ll see the tariff rate go up?