KUWAITCITY(IAMINKUWAIT) : If US President Donald Trump decides to impose a tariff on the remaining billions of dollars of Chinese goods, Apple may need to raise iPhone prices substantially to compensate for higher parts costs, JP Morgan estimates. According to the US CNBC JP Morgan estimated the price increase by about 14% is required to absorb the impact of the 25% tariff, maintaining a dollar margin for all players in the fixed supply chain. In a note on Tuesday, the bank reduced the cost of making and selling the iPhone XS duty free, which is about $ 1,000, compared to what it would cost if the tariff reached 25% of Chinese parts. That would raise iPhone's retail price to $ 1,142, the company said. Although Trump has not decided to impose a tariff on Chinese goods worth another $ 300 billion, the US Trade Representative's Office has officially started the approval process on Monday, as soon as the new tariff can enter into force on June 24. Bank of America saw the transfer of iPhone exclusively to America as an option for Apple. The bank estimates that the price of iPhone will increase by 20% if 100 percent of the phone is manufactured in the United States. "We estimate that the additional cost of manufacturing iPhone devices in the United States can range from 15 to 25 percent, and if transferred to consumers can lead to demand destruction, in our opinion," he said. But JPMorgan said Apple was likely to absorb the cost of the tariff and deal with its profits instead of raising the price of the phone. The Bank estimates that the total gross profit margin for iPhone will decrease by 4% if the customer does not pass the cost of customs duties.
Courtesy : alqabas.com