Following comments made by CEO Tim Cook yesterday, Apple further addressed the ongoing trade issues between the United States and China in a filing with the Securities and Exchange Commission today. In the filing, Apple explained that tariffs and similar practices could “adversely affect” the company going forward…
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As first reported by Bloomberg, Apple explained in the filing that tariffs could increase the cost of its products, the components that go into making them, and raw materials. These increased costs, the company says, would then adversely affect its gross margin.
Further, Apple says in the filing that such tariffs could make its products more expensive to consumers, thus making them less competitive and affecting consumer demand.
Here is Apple’s full explanation of how looming trade disputes could affect its products and consumers:
“International trade disputes could result in tariffs and other protectionist measures that could adversely affect the Company’s business. Tariffs could increase the cost of the Company’s products and the components and raw materials that go into making them. These increased costs could adversely impact the gross margin that the Company earns on sales of its products.”
“Tariffs could also make the Company’s products more expensive for customers, which could make the Company’s products less competitive and reduce consumer demand. Countries may also adopt other protectionist measures that could limit the Company’s ability to offer its products and services. Political uncertainty surrounding international trade disputes and protectionist measures could also have a negative effect on consumer confidence and spending, which could adversely affect the Company’s business.”
Apple’s filing with the SEC follows comments made yesterday by Tim Cook during the company’s Q3 earnings call. During that call, Cook explained that tariffs ultimately end up showing themselves as an added tax on consumers and that he hopes “calm heads prevail” in ongoing talks between the United States and China.
At this point, the Apple Watch looks most likely to be affected by a fourth round of tariffs. Apple hasn’t offered concrete data, however, on how such tariffs would affect the device.