Apple has now become the first-ever one-trillion-U.S.-dollar publicly listed American company. But with a trade war ratcheting up between China and the United States for over a month now, and the Chinese market being vital to Apple, will the company get away intact?
According to Andy Mok, founder of Red Pagoda Resources in Beijing, any iconic American brands will be concerned about China-U.S. trade tensions, because they are very visible symbols and could easily become collateral damage. But he pointed out that it's the consumer who will finally bear the price.
"Apple’s unique position is that it’s shown their customers are very price insensitive that they can get away with charging 800 dollars, 900 dollars, even 1,000 dollars for their smartphone. So I think Tim Cook is very right in saying that this is an attack on the consumer, because I think they will and would be able to successfully pass that through to the final consumer," Mok said during a discussion on CGTN's World Insight with Tian Wei.
Apple's CEO Tim Cook recently stressed that their view on tariffs is that "they show up as a tax on the consumer and wind up resulting in lower economic growth and sometimes can bring about significant risk of unintended consequences."
Though Apple has so far been away of the danger zone, there's no guarantee this could continue if the two countries maintain their tit-for-tat taxes.
The U.S. announced on August 1 that it would increase the proposed additional duty on 200 billion U.S. dollars of Chinese goods from 10 to 25 percent. The list includes several categories of chips, raising fears that tariffs could impact the U.S. technology sector.
Chief Investment Officer of Tematica Research Christopher Versace said if the tariff goes into effect with Apple's components targeted, the company will offset pressure by raising prices.
"What would it mean for the price of its components? What would Apple do in terms of adjusting their price on the devices they sell, or the services they produce? If the tariff goes into effect, I think we could see Apple raises its prices. It might be willing to digest some profit pressure, but at the end of the day, I think it will increase prices to offset the tariffs. That would probably hit consumers," said Versace.