Kuo: Apple Can Reduce Impact of Trump's Massive Tariffs in Five Ways

U.S. President Donald Trump on Wednesday announced that massive tariffs will be applied to imports from many countries, starting April 9. The tariffs will significantly impact Apple's supply chain, with iPhones and other products imported to the U.S. from China, India, and Vietnam set to face 54%, 26%, and 46% tariffs, respectively.

2024 iPhone Boxes Feature
Apple supply chain analyst Ming-Chi Kuo today said that if Apple does not raise prices, its overall gross profit margin could face a significant drop of 8.5% to 9%, due to the tariffs significantly raising costs. However, he outlined five ways in which Apple can reduce the impact of the tariffs on its gross margins going forward:

  • Apple can boost iPhone production in India. Kuo said if India can secure tariff exemptions through new trading agreements with the U.S., and Apple boosts its iPhone production capacity there to over 30% of its global supply, the negative impact on gross margins could shrink to just 1% to 3%.
  • Apple could raise prices on iPhone Pro models. In the U.S. market, Kuo said high-end iPhones account for 65-70% of new model sales, and he believes that "high-end consumers are relatively more accepting of price increases." So, the Pro and Pro Max models could see price increases, if absolutely necessary.
  • Apple could increase carrier subsidies for iPhones.
  • Apple could reduce trade-in values to partially offset the costs of tariffs.
  • Apple could put even greater pressure on its suppliers to cut costs.

Apple's overall gross margin was 46% in the 2024 fiscal year. Gross margin is a profitability metric that indicates the percentage of money that Apple earns on a product like an iPhone after subtracting the costs of making the product. Even if Apple's gross margin drops below 40%, Kuo believes this dip "should be short-lived."

Apple's stock price dropped more than 9% since Trump's announcement.

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Top Rated Comments

Gen Avatar
18 hours ago at 06:40 am
Or we just get a new president?
Score: 99 Votes (Like | Disagree)
BelgianChoklit Avatar
18 hours ago at 06:39 am
The orange dictator thinks these measures will make Amerika rich. Also, as if other countries won't retaliate with their own countermeasures. Allnof this because he mad that Europeans don't buy American cars, not realising or not willing to accept they just aren't good enough.
Score: 52 Votes (Like | Disagree)
Xavier Avatar
18 hours ago at 06:42 am
Hopefully my phone will stay in working order for at least 4 more years, and when we get rid of this president.
Score: 48 Votes (Like | Disagree)
miric Avatar
18 hours ago at 06:33 am
I don't see any "Apple can reduce their profit and greed". ?
Score: 47 Votes (Like | Disagree)
goodcow Avatar
18 hours ago at 06:38 am
Tim Apple about to double SSD upgrade prices.
Score: 40 Votes (Like | Disagree)
ramallite Avatar
18 hours ago at 06:48 am
This administration is basing its economic policy on right-wing fantasies (which, by definition, is currently based on Bannon-driven reptilian instincts and not on actual high-level research), and it shows.
Score: 33 Votes (Like | Disagree)