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Apple has become the world's first publicly traded company worth $ 1 trillion, the financial reward of an elegant technology that has redefined what we expect from our gadgets. (August 2nd)
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Apple AirPods is one of many products on which the company believes that pricing could have an impact.(Photo: Revised / Michael Desjardin)

This Apple Watch, did you have your eye on? It could become more expensive according to President Donald Trump's trade war with China.

Last Wednesday, Apple wrote to US Trade Representative Robert Lighthizer that a proposal to impose $ 200 billion tariff on products imported into the United States, including a range of products such as Apple Watch, Apple Pencil, AirPods, the Mac Mini, adapters, cables and chargers – could lead to higher prices for customers. The company did not mention the iPhone, which accounts for more than half of its business figure.

Trump has already imposed tariffs on about $ 50 billion of goods from China, and has threatened tariffs on billions more, including levies of up to 25 percent on $ 200 billion worth of goods. Apple products. A tariff is essentially a tax on products entering the United States worldwide.

The Cupertino, Calif.-based company did not provide specific price details or confirm that it would increase them due to possible pricing. But Avi Greengart, director of research for consumer platforms and devices at market research firm GlobalData, has speculated that a price increase could reach 10%.

How would this affect a device such as the Apple Watch? A low-end model of the 3 series is $ 329, according to the Apple website. With a price jump of 10%, you'll get an extra $ 32.90 if Apple has decided to transfer the higher costs to consumers. For the AirPods, the current price of $ 159 would still increase by $ 15.90.

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"Apple would not want to pass a 25% price increase on an Apple watch," Greengart said. "It can have a big impact on demand, and they would try to divide almost the difference and see how much of the loss they can bear and how much the consumer is willing to bear."

But success for consumer portfolios could be much greater, says Angelo Zino, chief analyst at CFRA, a Wall Street research firm. Zino believes that the average selling price of the products that Apple says will be affected by the rates would increase "by at least 10% to 20%".

At least one Wall Street professional estimates that Apple, which became the first month the first US group to reach a market value of $ 1 trillion, will bear the costs. Gene Munster, an analyst and investor at Loup Ventures, believes the company would probably absorb the additional costs and not raise prices.

However, a price increase could be between nothing and 20%. Tom Forte, an analyst at D.A. Davidson, believes that the potential price increase for devices exposed to tariffs could start at 5% and reach 9%.

A 5% price increase in the Apple Watch would force customers to shell out an additional $ 16.45 for its Series 3 offering; the cost of its popular AirPods would increase by $ 7.95.

"The consumer will bear the weight of tariffs," said Forte to USA TODAY.

Apple stocks, up 30% this year, fell 1.3% Monday.

Apple could not be contacted immediately for comment.

But in last week's letter, the company said, "Pricing increases the cost of our operations in the US, hijacks our resources and puts Apple at a disadvantage compared to foreign competitors," Apple wrote. "As all tariffs turn out to be a tax on US consumers, they will increase the cost of Apple products that our customers now rely on in their daily lives."

The letter from Apple prompted Trump to suggest the company stop manufacturing its products in China and open factories in the United States.

"Make your products in the US instead of China." Start building new factories now. "Exciting! #MAGA," said Trump in a tweet Saturday, which ended with the hashtag "Make America Great Again ".

Wednesday, during its big media event, Apple is expected to unveil new products. Rumor has it that the company will unveil three new iPhones.

Walt Piecyk, an analyst with the BTIG financial services company, predicted that neither tariffs nor price increases would hurt Apple – or its fans. On the one hand, Apple's profit margins are high, allowing it to mitigate any negative impact on customers. In addition, Apple customers have been willing to pay a lot of money.

"Apple's loyal customer has been willing to pay higher prices, even without the excuse of pricing that would impact the entire market," Piecyk said.

Contributor: Jefferson Graham in Los Angeles

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September 12, 2018.
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