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Munster: Even If China Levies Taxes On iPhones, Your Cost Will Likely Stay The Same

Munster: Even If China Levies Taxes On iPhones, Your Cost Will Likely Stay The Same

Apple Inc. (NASDAQ: AAPL) CEO Tim Cook is concerned iPhones could be caught in the crossfire of a U.S.-China trade war and jeopardize the 20 percent of Apple revenue exposed to the Asian nation, according to a New York Times report.

What To Know

As yet, the company’s safety status is uncertain. President Donald Trump was said to have told Cook that iPhones assembled in China would be exempt from damaging tariffs. However, White House trade adviser Peter Navarro said Tuesday he had no knowledge of such a deal.

One Street expert maintains optimism that Apple will elude the potential blow.

"We don't expect any tariffs to be levied on any iPhones given the extent of campaigning Tim Cook has done with the Trump Administration and separately with the Chinese government,” Loup Ventures managing partner Gene Munster told Benzinga. “It is most beneficial for both governments to leave things unchanged.”

No Sticker Shock

In the chance that Munster’s wrong, some expect a price increase for American iPhone consumers, which could affect sales.

But Munster has a more bullish read. He expects a 5-percent increase in the average production cost of the iPhone X from $655 to $690, which he doesn't expect to affect U.S. consumers or iPhone sales.

“We think Apple would leave the retail cost of the iPhone X unchanged,” Munster said. “Given Apple would likely absorb a 5 percent increase in cost of good, there will be no ‘sticker shock.’”

Related Links:

Trump's Trade Strategy: Pros And Cons

Munster: Buybacks Will Help Distinguish Apple From Its Contemporaries

Latest Ratings for AAPL

Jan 2021Raymond JamesMaintainsOutperform
Jan 2021WedbushMaintainsOutperform
Jan 2021Cowen & Co.MaintainsOutperform

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