President Trump has imposed significant tariffs on a number of countries that provide components and assembly for Apple’s products. And that means Apple’s costs are going to increase significantly. Apple has taken steps to diversify its supply chain and reduce its reliance on China. While that was largely triggered by the pandemic it did also insulate the company, to some degree, from regional supply issues.
The tariffs introduced by the Trump government have made aspects of that strategy moot. The new tariffs impact many countries that Apple depends on for components and assembly including:
- China: 54%
- Ireland: 20%
- India: 26%
- Japan: 24%
- Malaysia: 24%
- Taiwan: 32%
- Thailand: 36%
- Vietnam: 46%
(Source: Bloomberg)
Those tariffs will impact the costs of goods entering the USA. But the question remains whether those price increases will impact prices outside the United States.
There’s speculation that Apple’s prices will increase by around 10%. That assumes tariffs will cause a 20% increase in costs but that Apple will absorb some of the pain so it’s not all pushed to consumers. But that only speaks about devices imported to the United States. Apple ships devices to Australia from various locations with China being the most common.
Assuming Australia’s tariff agreements with China don’t change, the tariffs imposed by the Trump government should not impact local prices for Apple products.
But…
Apple likes to keep prices reasonably close across different markets. While there are some differences across different countries, those can largely be explained by local taxes and Apple’s hedging strategy with international currencies. In Australia, we see higher prices that the USA because of the GST being added to prices whereas sales taxes in the USA are added later and vary significantly between states and cities. Throw in the variations that occur minute by minute with currency fluctuations and you can see why there are differences.
So, the impact of the Trump government’s tariff regime is unknown. We’ll have a better idea when Apple does its next major product update. The next major release is likely to come before WWDC and that will tell us what is going to happen to prices. And it will tell us if Apple will allow prices for US customers to be higher than the rest of the world.
Anthony is the founder of Australian Apple News. He is a long-time Apple user and former editor of Australian Macworld. He has contributed to many technology magazines and newspapers as well as appearing regularly on radio and occasionally on TV.