Posted on 08/05/2019 11:53:52 PM PDT by House Atreides
Reliable Apple analyst Ming-Chi Kuo is out today with a new investor note covering Apple’s supply chain and how President Trump’s latest rounds of tariffs might affect things. Kuo says that he believes “the tariff may not impact the prices of Apple’s hardware products” in the United States....
...Kuo writes that Apple has likely made “proper preparations” for such a tariff, and he predicts that Apple will “absorb most of the additional costs” in the mid-short term. Thus, Kuo believes that “prices of hardware products and shipment forecasts for the U.S. market will remain unchanged” despite the tariff.
In the long-term, Kuo writes that he thinks Apple’s non-Chinese production locations could meet “most of the demand from the U.S. markets” within the next two years. This thinking is based on a combination of “production automation degree” and Apple’s marketshare in the United States. “If the market share of the U.S. market is lower, and the production automation degree is higher, expanding the non-Chinese production capacity” to meet U.S. demand is made easier, Kuo says.
(Excerpt) Read more at 9to5mac.com ...
If Apple can do this, surely simpler products such as tennis shoes and ticky-tac imports could be more easily and more quickly moved out.
Winning!
Apple’s stuff is closer to capital goods than commodities, though.
That said, Apple’s been busily diversifying their supplier base and moving production to other countries (including the US!) since Trump was elected.
So much for all the Sturm und Drang about the negative effects of tariffs. It’s a crock, folks, and Trump is dead right to fight the adverse Chinese trade policies that have been screwing our country over for decades now, as they syphon off billions of U.S. dollars and steal our technology. China then spends those billions to build up their military at our expense:
So, Apple is making fewer products as they lose market share and will now focus more on robot manufacturing.
Tariffs imposed on an individual nation (China for example) should not impact prices to the U.S. consumer. The U.S. consumer is not going to pay a 10% premium to buy a Chinese TV and will certainly buy a Korean or Japanese TV instead.
Protective tariffs imposed on all nations, such as the steel and aluminum tariffs that President Trump implemented, can increase the price on certain goods, such as cars.
IMHO, the U.S. needs steel and aluminum for economic an military protection. If this requires protective tariffs, then so be it.
There is a lot more profit margin in Apple products than in cheap consumables like sneakers and tennis balls. But the converse (inverse?) is also true - more incentive to move production to avoid the tariffs. In the short term I imagine most companies with large scale capacity (like computers, phones etc) are trying to weather the storm and wait it out. But as it appears this may be a protracted issue lasting perhaps years, they will start to make contingencies and/or move production.
Mind you, it is not so easy to move a multi-billion dollar facility. FoxConn, which makes a lot of Apple products, is rumored to be trying to offload an $8 billion facility. Moving production takes a lot of capital and a lot of time.
POTUS Trump is absolutely doing the right thing for the country here. And you are correct to point out that these are not your typical ‘protectionist tariffs’. We aren’t doing this to protect domestic capacity on categories of goods. We are doing this for much larger nationalist (and justifiable) reasons.
I’m hoping to get one of those cheese graters.
not hard when they charge $800 for a $200 phone.
$800 for $200 phone is a low profit margin for Apple.
They charge $1000 for a monitor stand. (Monitor not included)
All this is saying is that Apple will switch US destined production to it factories elsewhere and expand those factories, if needed, while providing the rest of the world’s need from China.
You constantly strive to improve your skills and market value. Making wise choices and investments for the long term prosperity of the smallest economic unit is also a solid strategy for the society as a whole.
An entrepreneur who built a private multi-billion dollar a year enterprise knows these economic rules like the back of his hand. And we're a lucky people that he rose to the challenge of fixing this great country!
Many "Korean" TV brands are made in China (Chinese bought the name) AFAIK, all "Japanese" TVs are made somewhere other than Japan. Maybe Malaysia. Some "American" brand names like RCA are made in Korea.
Sneakers cost *how* much in materials in a sweatshop?
And you pay $150 for them.
Put down the bong.
Apple needs to maintain production in China to provide products for the China and perhaps Asian market.
It would seem that a solution is for Apple to provide for production in the USA as well if prices can be competative.
forcing production out of china in general is a tremendous benefit to the U.S. and the world, even if it’s to other countries besides the U.S. ... in the long run, that’s going to damage the Chinese economy more than a temporary tariff ... And that’s probably the real threat that will force the Chinese into a fair trade deal with the U.S. ...
I can’t find anywhere in this article where Apple is shifting production and moving out of China. They say non-Chinese plants have enough capacity to handle the US demand.
Not all sneakers cost $100s of dollars. I don’t give a hoot about Nike. It’s not like China’s economy is driven by Nike and Apple. They make tons of low cost stuff.
I agree with your main point, now that you put it that way; but sneakers was perhaps not the *best* example.
Thank you for clarifying.
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