Apple’s suppliers may shift iPhone production away from China in case tariffs on U.S. imports skyrocket, according to a report.
The tech giant’s suppliers plan to stick with the existing model even if the U.S. levies a 10 percent import tariff on smartphones, Bloomberg reports, citing unnamed isources. But it will have to reassess the situation should U.S. President Donald Trump decide on a more punitive 25 percent, the report added.
A 10-percent tariff could result in an earnings-per-share decline of just $1 for Apple, should all its hardware sold in the U.S. be subject to the levy and the company absorbs the cost. However, a more severe scenario of a 25 percent tariff -- absorbed by Apple -- could result in an EPS decline of about $2.50.
Most iPhones are made by assembly partner Hon Hai Precision Industry Co. in China. Donald Trump told the Wall Street Journal last month that tariffs could be slapped on smartphones and laptops made in China.
Washington and Beijing begin thorny negotiations on a trade deal that could scale back a series of tariffs implemented this year.