Trump does a 180-degree reversal on China which could lead to the resumption of the trade war
To refresh your memory, the tariffs do not mean that China pays the U.S. millions of dollars as some people have tweeted. In fact, China has not paid the U.S. one penny because of the tariffs. You see, the tariffs are simply an import tax charged to U.S. companies and consumers on products brought in from China. U.S. firms like Apple can either pay the tax and eat the whole amount lowering their margins and profits, or pay the tax and pass the cost on to consumers in the form of higher prices.
Reportedly 3 to 4 million classic AirPods units will be produced in Vietnam starting this quarter
Since both countries signed off on a trade deal in January, it appeared that U.S. companies that manufacture their products in China would eventually be able to put the tariffs in the rear-view mirror. But since U.S. President Donald Trump has done a 180-degree turn on China (praising President Xi in March for China's response to the coronavirus and now attacking the country for hiding aspects of the outbreak), the deal might be canceled; the president recently said, "I’m having a very hard time with China."
U.S tech firms stopped worrying about the tariffs once the coronavirus outbreak started. Now that President Trump is pressing hard to reopen the economy, we could see some U.S. tech companies once again consider moving their supply chains out of China. Another executive of a supply chain company said, "It's still an irreversible trend that big U.S. tech companies will need to gradually seek production bases outside China. Most of the U.S. companies including Apple are looking for non-China production. ... Some prefer Vietnam and some like Thailand, some in India, and some in the Americas, and other Southeast Asian nations."
Some believe that Apple will end up moving most of its production to Vietnam; Samsung produces about half of its phones in the country. Apple would have to make sure that it has access to a supply chain that could provide it with components in the quantity and quality that it needs. India was another possibility especially because Apple already produces some iPhone models in the country. The question surrounding India is whether Apple could build a large enough supply chain in the region for global iPhone production.
The AirPods are Apple's fastest growing device and are also the top selling wireless Bluetooth earbuds with a 50% share of the market. Apple sold about 65 million units last year according to Counterpoint Research; the latter expects 100 million units to be sold this year.
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