Reliable Apple analyst Ming-Chi Kuo is out today with a new investor note covering Apple’s supply chain and how President Trump’s latest rounds of tariffs might affect things. Kuo says that he believes “the tariff may not impact the prices of Apple’s hardware products” in the United States.

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Last week, Trump announced that the United States would place a 10 percent tariff on another $300 billion worth of goods imported from China, starting September 1st. While it’s still unclear whether this would include Apple products, analysts are concerned and AAPL stock took a hit on the news.

Kuo writes that Apple has likely made “proper preparations” for such a tariff, and he predicts that Apple will “absorb most of the additional costs” in the mid-short term. Thus, Kuo believes that “prices of hardware products and shipment forecasts for the U.S. market will remain unchanged” despite the tariff.

In the long-term, Kuo writes that he thinks Apple’s non-Chinese production locations could meet “most of the demand from the U.S. markets” within the next two years. This thinking is based on a combination of “production automation degree” and Apple’s marketshare in the United States. “If the market share of the U.S. market is lower, and the production automation degree is higher, expanding the non-Chinese production capacity” to meet U.S. demand is made easier, Kuo says.

Here is Kuo’s forecast:

1. iPhone. Expanding non-Chinese production capacity is challenging due to the low degree of production automation. We expect that non-Chinese production locations to meet U.S. market demand in 2020.

2. iPad. It’s not difficult to expand non-Chinese production capacity to meet U.S. demand because of the higher degree of production automation and the smaller U.S. market share.

3. Mac. Though its degree of production automation is higher than the iPhone’s, the Mac’s non-Chinese production locations can’t meet demand from the U.S. market until 2021 because of higher market share of U.S. market .

4. Apple Watch. We expect there will be non-Chinese production locations, starting in 2020.

5. AirPods. We estimate that the change of AirPods’ internal design from SMT to SiP will enhance the level of production automation.

On Apple’s earnings call last week, Cook addressed Apple’s supply chain and reports that it would expand to other areas. Cook noted that Apple already has a “global” supply chain of sorts:

I know there’s been a lot of speculation around the topic of different moves and so forth. I wouldn’t put a lot of stock into those, if I were you. The way I view this is, the vast majority of our products are kind of made everywhere. There’s a significant level of content from the United States, and a lot from Japan to Korea to China, and the European Union also contributes a fair amount. And so that’s the nature of a global supply chain.

Thus far, Apple has largely escaped the effects of tariffs, with no Apple products (except some accessories) included in the imports currently being penalized.

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