This morning, Bloomberg reported that the Trump administration’s new 145% tariff on China will not include tech imports. Specifically, this exemption covers “smartphones, laptop computers, hard drives, computer processors, and memory chips.” Essentially, Apple can breathe a little easier for now.
While we are safe today, a 145% tariff on imports from China would have caused significant harm. Here’s a brief overview of what we narrowly avoided.
Overview of the Tariff
Tariffs are assessed on top of the declared value upon import. This means they could squeeze Apple’s profit margins, but may not necessarily lead to price increases – at least in small amounts.
For instance, an iPhone 16 Pro 256GB has a component and assembly cost of about $580. With the initially suggested 20% China tariff, the effective cost would rise to $696. Although Apple would prefer not to see their margins shrink, selling the phone at its current price of $1099 would still be feasible.
However, under a 145% tariff (or even the initially proposed 54% reciprocal tariff), price increases would have been unavoidable:
As a reminder, the iPhone 16 Pro 256GB is priced currently at $1099. Apple typically aims for high profit margins, meaning any extreme tariffs would likely have prompted a significant price increase.
Hypothetical Prices Including Tariffs
Some Apple devices, such as AirPods and the Apple Watch, are already largely produced in Vietnam, where a 90-day tariff freeze has been put in place. Many countries are actively pursuing trade agreements to aim for a zero-tariff scenario. Some newer Macs are also being manufactured in Vietnam.
Nevertheless, Apple continues to depend significantly on China, making it worthwhile to consider what might have occurred if circumstances hadn’t shifted.
For another example, let’s examine the M2 MacBook Air. According to TechInsights, the bill of materials for an M2 MacBook Air is approximately $506, covering both hardware and assembly. While it may be two generations outdated, it serves as a relevant reference point since the MacBook Air remains largely similar.
If a 145% tariff were added to this, the total cost would come to $1239 before accounting for profit margins for a 13-inch MacBook Air with 256GB storage.
As a final illustration, let’s consider the 2021 12.9-inch iPad Pro. Per Nikkei Asia, the parts cost is around $510. With a 145% tariff, the pre-margin parts cost could have reached $1250, far surpassing its original retail price of $1099.
This last example is primarily for clarity, as Apple has since redesigned the iPad Pro.
Conclusion
It’s evident that a 145% total tariff on imports from China wasn’t a feasible option for pricing new tech products. These figures are rough estimates but highlight the potential adverse effects we might have faced.
For the time being, we can continue to enjoy the current pricing of Apple products. For the next few weeks at least, we can put speculation about imminent Apple product price hikes on hold.
If the uncertainty surrounding pricing has you worried and you’re looking for some of the best deals on Apple products currently available, here they are:
In light of the chaotic situation regarding the Trump administration and tariffs, I wouldn’t get too comfortable thinking this news will last indefinitely.
My favorite Apple accessories on Amazon:
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