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A customer buys the new iPhone X from an Apple Store on November 3, 2017 in Palo Alto, California.
According to Bank of America Merrill Lynch, IPhone prices will increase significantly if Apple assembles its smartphone nationwide.
"Apple prices could rise because of the huge tariffs we charge China – but there is a simple solution where there is a zero tax and even a tax incentive." Make your products in the US instead of China. Plants now … Exciting! #MAGA, "he said on social media.
This comment comes after the revelation of the letter sent to Robert Lighthizer, a US trade representative, according to which the tariffs proposed by Trump on the $ 200 billion of imported Chinese products will affect Apple Watch, AirPods, Mac mini and Apple Pencil .
Bank of America Merrill Lynch said that Apple could respond to Trump's pressure by asking its partners to launch some iPhone assembly operations in the United States.
"The US manufacturing sector seems to be back on the agenda of President Trump … We think that Apple could ask Hon Hai and Pegatron to transfer a small portion of their iPhone production to the states. In response to the request of President Trump, "Wamsi Mohan analysis said in a note to clients titled" Trade Risk Handicapping in China and the Development Potential of the US Industry "on Monday. "The conclusion was that moving the production (100% of the final assembly) to the US for the iPhone (which is not currently affected by tariffs) would require price increases of 20% to offset additional salary costs ".
According to Mr. Mohan, in the "most likely" scenario in which Apple transfers 10% of its iPhone assembly to the United States, the average selling price of the iPhone would increase by 8%. He also said that if Apple changed 50% or 100% nationwide iPhone assembly, it would increase iPhone prices by 14% and 20% respectively.
The analyst downplayed the prospect that Apple brings a more complete production of iPhone [non-assembly] factories in the United States due to higher labor costs. He noted that the wages of an American worker were 2.6 times higher than those of a Chinese worker.
Mohan reiterated its repurchase note and price target of $ 250 for Apple's shares, which represents a 13% increase over Friday's closing.
Apple did not immediately respond to a request for comment.
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