Apple Needs A 14% iPhone Price Hike To Offset Higher Tariffs: JPM | WHAT REALLY HAPPENED


Apple Needs A 14% iPhone Price Hike To Offset Higher Tariffs: JPM

One of the companies that has been hit the hardest following the latest escalation in trade war between the US and China, and which not only is reliant on Chinese consumers to purchase its products and services on the mainland, but also produces iPhones in China and is thus subject to a double whammy of anti-American sentiment and higher export tariffs, is Apple, with its shares sliding -11% since the start of last week and 5% on Monday, on fresh worries relating to escalating trade war and the imposition of tariffs on imports from China, as well as on concerns over the consequences of the recent Supreme Court decision allowing a lawsuit against Apple practices in the App store.

In a note published this morning, JPMorgan writes that while it is difficult to precisely attribute the magnitude of the share price decline between tariffs and the lawsuits, "it is fair to say that the majority of the share price decline is driven by tariff
concerns."

Sure enough, according to calculations by JPM's Samik Chatterjee, Apple would need as much as 14% price increase on iPhones to offset headwinds from scope expansion of tariffs.

Webmaster's Commentary: 

Understanding this, is going to cause people to look for cheaper alternatives, at least for the time being.

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