What is Apple's plan B for the Commercial War?

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In the last month, tensions between Beijing and Washington have increased due to the commercial war. What other option does Apple have to deal with the situation?

Due to the tariffs that Donald Trump, president of the United States, intends to impose exponentially on imported goods of Chinese origin, the technological giant could be significantly affected by being in the middle of a commercial dispute between both countries. The majority of the production and supply chain of Apple products is located in China, which is why, due to the trade war between the United States and the Asian country, the company would be expected to have a plan B to avoid tariffs that could eventually be implemented.

Leer en español: ¿Cuál es el plan B de Apple para la Guerra Comercial?

With tariffs for a value of up to 300,000 million dollars, Chinese imports have had to face a US market full of economic constraints since early May this year. However, Apple continues to suffer no great havoc in terms of production since the imposition of these new trade barriers.

Nevertheless, after what happened with Huawei, an upcoming scenario would be expected where Apple could face a steep tariff rise as possible retaliation for Trump's decisions from the Chinese government.

Also read: Is there any winner in the 'Technologic Cold War'?

Considering that current situation, Apple would be expected to take its production to places where tariffs are not charged. According to a report by La Nación, the giant was already starting to move its production of some iPad and Mac models to Indonesia. In addition, it should also be noted that another country where it could start producing its products could be India, where the first Apple Store will be opened in the month of July.

In the same way, it should be taken into account that the tariffs that would apply to Apple products would be those destined for the United States. Therefore, it would not be necessary for the global supply and production network to change, but only the one that meets the needs of the US demand.

The economic projections of the technological giant

Despite not evidencing a clear collateral effect in terms of production and tariffs, in one aspect of economic projections, the previous month left one of the worst weeks for the company, since shares in Wall Street fell by 7%.

Because of this, Tim Cook, Apple's CEO, in an interview on CNBC, stressed that the measures imposed by Trump have been a relevant factor to highlight in the development and economic projections for the company in 2019. In addition, he pointed out how Apple can be a clear example of how commercial tariffs can damage US companies collaterally.

In summary, according to what Cook said in the interview, the expected revenues in the company for the first quarter of the year were not reached, which were 7.6% lower than in 2018. By highlighting these figures, Apple's current head did not blame only the commercial war, but he emphasized the importance of this factor in the rest of the year, especially in terms of production.


LatinAmerican Post | Alejandra Caballero

Translated from "¿Cuál es el plan B de Apple para la Guerra Comercial?"