At one stage there were fears that President Trump’s Chinese tariffs would result in large iPhone price rises, with high-end models potentially costing as much as $2,150. In fact, Apple won an exemption and we haven’t seen any price rises at all. Yet.
In an otherwise extremely positive Q2 financial report Thursday, Apple revealed that it expects to face a charge of $900 million next quarter as a result of tariff activity, assuming the tariffs don’t change. That’s not a huge figure for a company as big as Apple, but isn’t something it can just ignore.
In discussions following the announcement, CEO Tim Cook briefly responded to speculation that the company could be forced to put up prices, and while cautious, his answer suggested that this course of action remains a real possibility.
“On [pricing],” he said (via 9to5Mac), “we have nothing to announce today. I’ll just say that the operational team has done an incredible job around optimizing the supply chain of the inventory, and we’ll obviously continue to do those things to the degree that we can.”
At first that sounds like the sort of information-light, positive-spin corporate answer we expect to hear at earnings calls. Of course Cook doesn’t rule out price rises, because no CEO can know what’s coming.
Still, that phrase at the end, “to the degree that we can,” might be more revealing than he intended. It hints at a recognition of looming issues. Supply chain optimization has its limits, not least because Apple’s supply chain is so vast and complicated and switching from China to India, for example, is not something that can be accomplished quickly. The tariff exemption may not last. And Apple isn’t the sort of company to just happily absorb hits to its bottom line without considering all the options, including price rises.
source: https://www.macworld.com/article/2770515/tim-cook-declines-to-rule-out-price-rises-as-tariffs-bite.html
