The US President Donald trump called on Apple to move production of its devices from China in the United States. For America, such measures contribute to the restoration of local production and improve economic performance. The very same company trump in his tweet was trying to motivate the fact that in this case it will avoid new customs penalties on imports of its products into the United States:
“Start building new plants now. Exciting!” — said the President of the United States.
The post Twitter appeared the next day after Apple said at the U.S. chamber of Commerce that the proposed U.S. tariffs on Chinese goods worth $200 billion will affect the cost of production hours, wireless headphone and other products. All of the products are imported from China and uses mostly Chinese components (among exceptions, for example, processors from Taiwan and screens from Korea). This was the first statement from Apple about the damage from the trading battle, which lasts for several months.
Now Apple manufactures in America, only a small fraction of devices are the most expensive and low-volume products, such as powerful computer iMac Pro iMac and monoblock. Build other devices in the United States, especially the iPhone, created millions of copies, means the creation of large production facilities and hiring hundreds of thousands of employees. In order to maintain profits, the company will have to raise the price of their products in proportion to how much more expensive will cost the labor of American workers with the limitation of working hours, as well as benefits and insurance, which the employer is obliged to provide to their employees. For comparison, in China the working day lasts 12 hours, and the salary is less than $900 per month.
If Apple will push the Assembly in the USA, you will have to pay twice: in addition to the high cost of production, will be required to pay high duties on components, which, as mentioned above, are manufactured in China. In addition, this transfer will take considerable time, as the American experts now simply have no experience of creating a mass production of smartphones and accessories. This may not only influence the final price of the device, but also on the timing of release of new models. And Apple is losing ground in the market in the first half of 2018 Huawei has overtaken the us company, the number of smartphones sold.
Another important factor — sales of Apple products in China, where the company increased revenue over the year by 19% to $9.6 billion If the customs sanctions will lead to a total relocation of production in the United States, the response to China’s ban on the import of Apple products that will bring down the sales of the company and therefore have a negative impact on the economy as a whole.
Given the criticism the company has undergone in the past year after the presentation of iPhone X cost from $999, a further increase in the price of the device will be painful for the buyer. However, there are those who believe that the iPhone is undervalued by the market and should cost more. Billionaire Warren Buffett said that the opportunities that gives man the iPhone are enormous and are much more expensive than Apple asks for it.
One compromise solution can be build in Mexico: the labor force is cheaper there, and recently at the state level, agreements were reached on trade duties. However, it can hardly be the main idea of trump, who wants to provide jobs in the United States and to increase revenues to the state budget.
On the background of the tweet trump this weekend, Apple’s stock only slightly — by 1.5% — fell at the opening of trading on Monday. On Wednesday 12 September the company will hold a conference, which is expected three new models. In the case of a successful launch campaign can easily make a small drop. Globally month ago, Apple became the first American public company, estimated at $1 trillion. But if she left without the mass market, Warren Buffett is unlikely to save it from collapse.
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