What happened: The US-China trade war could results in a 2% to 3% increase in Apple’s iPhone production costs, said Dan Ives, an investment analyst at Wedbush during a Fortune event on Tuesday. Ives attributed the increase to the tariffs on batteries and other components made by Chinese suppliers, and expects Apple’s costs could increase further if the US government take steps to impose fresh 25% tariffs on $325 billion in Chinese goods. If that happens, iPhones would cost as much as $150 more each to produce, Ives said.
Why it’s important: The escalated trade war between China and the US could hit Apple hard, as it manufactures most of its products, including its iPhone and Macs, in China. The company’s Greater China sales for the first three months of the year sank 22% year-on-year to $10.22 billion, though it managed to slow the rate of decline compared with the 27% year-on-year drop in the fourth quarter of last year. The US electronics maker lowered prices for three iPhone models including the newer XS and XR as much as RMB 1,200 ($175) per device, according to a report from The Beijing News.