China trade war could make iPhones 3% more costly

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Rumored to be called the iPhone XI and XI Max, the 2019 versions of Apple's flagship smartphones are expected to feature a triple-lens rear camera, a new frosted glass back, and a more impressive front camera, but what else could Apple do to improve its smartphone and deliver the ultimate iPhone to its loyal customers?

Apple Inc. could see the production costs for its flagship iPhone rise 2-3% given the impact that trade tensions between the USA and China are having on input materials like lithium batteries, according to Wedbush analyst Daniel Ives. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.

The trade dispute between the USA and China is yet again in full swing - and stock of beloved tech giant Apple could be one of the first casualties.

"And given the reliance on China's established, low-priced labor force and expertise in manufacturing/tooling, a large-scale move out of the country would not only be costly, but could take multiple years to complete, potentially raising the odds of execution risk, in our view", the note continued.

United States investment bank Morgan Stanley estimates the new 25 percent tariff could add as much as 160 dollars to the price of a Chinese-made iPhone XS.

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The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers. The latest leak regarding Apple's iPhone 11 points to a few exciting features that will come loaded in the handset. Indeed, "Greater China" - which includes Hong Kong and Taiwan - represents Apple's third-biggest market, after the Americas and Europe. At a time when global iPhone sales are already weak, any further damage to China's economy would subsequently cut into one of Apple's most critical markets. In 2018, that region amounted to $51 billion in revenue, nearly a fifth of Apple's total revenue for the year.

Increased tariffs on Chinese goods will hike prices for consumers goods, analysts say.

Apple has consistently opposed Trump's proposed tariffs, and Cook has personally told Trump that Apple does not support implementing taxes on imports from China.

Shares of Apple (AAPL) rose 1.1% in pre-market trading.

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