Apple's iPhone might get expensive in US-China trade war
Morgan Stanley predicts that the new tariffs could add about $160 (124) to the cost of a Chinese-ma
(Web Desk) – As the trade war between the United States of America and China, US trade office announced raised tariffs from 10pc to 25pc on roughly $200 billion worth of goods imported from China.
Tech giant Apple obtains a Chinese supply chain for all their products from iPhones to Mac.
As 25pc tariff is levied on the components rather than the devices, it might make it difficult to calculate the inflation on retail prices.
However, Morgan Stanley predicts that the new tariffs could add about $160 (£124) to the cost of a Chinese-made iPhone XS, which starts at £999 as per Mirror reported.
US President Donald Trump insisted that China will pay the costs of the higher US tariffs which is not the way it works and the companies importing from Chinas are the one who pay the duties.
There are two possibilities for Apple to work it out; either by absorbing the hit to themselves or by inflating the cost on consumers.
It has been presumably heard that Apple is considering to move some of its production to India or Brazil instead of totally relying on China.
But although this could create a backup plan for suppliers, assembly processes would be far more difficult to replicate, according to Gene Munster of Loup Ventures.
"Apple will be exploring all options and this will be the definition of a slow turn because they really don’t have a credible alternative avenue to build phones," Munster told the Guardian .
"When Apple thinks about its business, it thinks in 10-year increments, so it makes sense for them to have other phone manufacturing and assembly that’s not just focused on China."
‘True’ cost of an iPhone
The news comes as a report by tech site musicMagpie reveals the true cost of an iPhone over a lifetime.
It found that, if consumers were to purchase an iPhone outright every time a new device came out, over the course of a lifetime this would cost a staggering £153,267.
If the average contract price is included, this adds on £41,076, making the total spend £194,343.
The site also worked out that the price of an iPhone has increased by 162% in the past 10 years, while the average hourly wage has increased by just 2.95% - from £11.88 in 2008 to £14.31 in 2018.
If consumers wanted to buy an iPhone XS, the 2018 flagship iPhone, the average person would need to work 70 hours to be able to afford it.
That alone is a 180% increase compared to the 25 hours needed to work in 2008 to be able to buy a new iPhone then.
"As we see each September, the brand-new iPhone becomes more advanced with amazing features, increased battery life and an improved professional grade camera," said musicMagpie’s Liam Howley.
"These upgrades cost more and more each time – which we come to expect, but at over £1,000 a phone, the blueprint has been set for the newer era phones."
