Overall, Apple’s stock declines after its new product event in September. This is because speculators generally raise the stock price in anticipation of what the new iPhones could bring. Once the new phones are introduced, disappointment is triggered and the speculators are launched madly towards the exit. It may not be a popular opinion, especially since there were some voices in yesterday’s communications (the main one being reverse wireless charging), but the presentations apparently impressed investors. Instead of decreasing the day after the new product event, Apple shares rose by $5.71 or 2.64% to $222.42. Once again, Apple is worth over $1 billion.
Yesterday the Wall Street Journal released a video explaining why Apple simply cannot yield to the demands of President Donald Trump and build the iPhone in the US unless you have avoided the news for the past year, you know that the US and China are involved in a trade war. The Trump administration has imposed tariffs on a large number of goods imported from China and the latest level of products, which are subject to the 15% tax, includes devices such as Apple Watch and AirPods.
On 15 December, 15% rates will apply to smartphones imported from China, including the iPhone. Apple may decide to consume all or part of the additional cost and transfer the balance to consumers in the form of higher prices. The company has already decided to absorb all the taxes imposed on certain iPhone and iPad covers so that consumers are not interested. Rates could increase the retail price of the newly announced iPhone 11 Pro by $40 in December. If Apple transferred the cost to consumers, it would increase the price of the device to $1,039 or more.
Trump has asked Apple to move production to the US several times
Yes, Apple is an American company. But keep in mind that most of its products are designed in California and manufactured in China. And this brings us to the official video. As noted almost from the start, Apple recently tried to assemble a key product in the US. When Apple’s marketing director, Phil Schiller, announced that the 2013 Mac Pro would be produced in the US, participants in the event of new products applauded. The computer (with a design that the Journal compared to a trash can) was built on a $100 million facility that the company built in Austin, Texas. But Apple had problems in the supply chain and was forced to move production to China.
About a year ago, Trump told Apple he could avoid tariffs by moving the production of its devices, including the iPhone, to the United States. It’s easier said than done. Apple has a global supply chain that would be difficult to replicate. Earlier this year, Apple said it would move up to 30% of its production outside of China and already produce some iPhones in India. However, the models produced in that country are mainly for domestic use to ironically save Apple from the tariffs in India that would increase the price of each phone by $100. While India is the second-largest smartphone market in the world, it is a country developing and many consumers cannot pay the price of a flagship phone. Apple thought that Apple was thinking of replacing part of the production in China in Vietnam. In July, Apple announced that it would start trial production of Bluetooth AirPods wireless headphones in the country. The device is currently assembled in China.
Last month, Google announced that it would move the production of its Pixel phones to Vietnam and outside China. But unlike Apple, Google produces a small number of phones (from 8 million to 10 million this year), which facilitates the assembly of a supply chain. Google will produce its phones in a factory that used to produce Nokia phones.
Donald Trump is not the only president of the US who has attempted to transfer Apple’s production to the United States. The Journal notes that President Barack Obama once asked the deceased Steve Jobs what would be needed to move the iPhone assembly to the US. To this Jobs replied that “those jobs are not coming back”.
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