China-US Trade War: Tech giants like Apple could be collateral damage

World
Europe

02:18

In an escalating trade war, US President Donald Trump recently increased tariffs on 200 billion dollars worth of Chinese imports. Among those that could get caught in the crosshairs - is tech giant Apple. CGTN's Mark Niu has more.

Apple is highly dependent on an extensive supply chain in China. So much so, there are predictions that new tariffs could raise the cost of the iPhone XS by $160. Investment banking company J.P. Morgan estimated an iPhone price increase of around 14-percent would be needed to absorb the impact of a 25 percent tariff.

TIM BAJARIN PRESIDENT, CREATIVE STRATEGIES "When it's actually defined to what are the components being used and things that are in it, I actually think the tariff cost is less than 14% and even lower. Then Apple could maybe split the difference, they do 7% to the customer, 7% they absorb. Either way, it's going to affect the customer, and either way, it's going to impact Apple."

Apple's CEO Tim Cook has lobbied the Trump administration in hopes of minimizing the impact of the trade war. But Bajarin says at the same time, Apple continues to search for ways to diversify its supply chain and not just depend on China.

TIM BAJARIN PRESIDENT, CREATIVE STRATEGIES "You can't do it overnight. One of their big suppliers is already moving what they do for Apple over to Indonesia. Pegatron's going to do that."

RAY WANG CEO, CONSTELLATION RESEARCH "In every aspect of a trade war, the consumer pays for that. The question is at what level, at what cost. Is it worth getting intellectual property, is it worth protecting jobs, is it worth protecting a trade imbalance."

As the U.S. puts pressure on companies doing business with Chinese tech giant Huawei, there's also talk of whether China could retaliate by imposing its own tariffs on Apple products.

RAY WANG CEO, CONSTELLATION RESEARCH "Tariffs on Apple products in China would be kind of tough. Here's the reason. Apple's sales and shares in China in the market is already really low. Samsung's not even in the market. The local players are doing the best."

MARK NIU MOUNTAIN VIEW, CALIFORNIA "So while most analysts agree that Apple will be able to weather the trade war's extra costs, they also agree it's the psychological impact of the tariffs that could prove to be more damaging in the long haul. Mark Niu, CGTN, Mountain View, California."