The Trump tariffs may have surprised the general public. But Apple and other makers of consumer electronics and computer hardware actually prepared for them.
Many tech companies started diversifying their manufacturing operations away from China years ago, after President Donald Trump imposed tariffs during his first term in office. Supply chain disruptions caused by the Covid pandemic accelerated the diversification move.
Apple is using its global supply chain to mitigate the impact of the U.S. tariffs, which mostly target products manufactured in China.
"For the June quarter, we do expect the majority of iPhones sold in the U.S. will have India as their country of origin and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch and AirPods products sold in the U.S.," Chief Executive Tim Cook said on a May 1 conference call with analysts. "China would continue to be the country of origin for the vast majority of total product sales outside the U.S."
Tariffs had limited impact on Apple's March quarter, but the company was prepared to take a $900 million hit in June quarter. That was before the U.S. and China agreed on May 12 to slash their respective tariffs for a 90-day negotiation period.
During the cooling-off period, the U.S. reduced its tariffs on China imports to 30% from 145%. The current tariffs include a 20% tariff imposed for China's role in fentanyl trade plus a 10% baseline tariff that the U.S. has levied worldwide.
Complicating matters, some electronics including smartphones and laptops received a temporary exemption from reciprocal tariffs. However, those electronics products still face the 20% punitive tariff on Chinese goods related to fentanyl.
Trump Tariffs Lead To Price Hikes
In a regulatory filing, Apple said it might have to raise prices on its hardware in the U.S. as a result of the Trump tariffs. Other companies have already taken this step.
In April, Logitech, a maker of peripherals for personal computers and other devices, raised prices in the U.S. by as much as 25% after the tariffs took effect. The U.S. accounts for about a third of Logitech's total sales.
"We never like to increase prices, but in this context we thought that was a responsible thing to do," Logitech Chief Executive Hanneke Faber told Investor's Business Daily. "So we've done a very targeted price increase, not on every product."
Logitech has been shifting its production from China to other countries since 2019. It now has manufacturing operations in five other countries: Vietnam, Malaysia, Thailand, Taiwan and Mexico.
"Today 40% of our product in the U.S. originates in China," Faber said. "That's way down from a few years ago. But we believe by the end of this calendar year that will be down to 10%."
Move From China Started In First Trump Term
Zebra Technologies, a maker of enterprise systems for managing inventory and assets, is also working to mitigate the tariffs by shifting production to other countries and through price increases. Over the last decade, Zebra's U.S. imports from China have declined from 85% to about 30%.
Chief Financial Officer Nathan Winters told IBD that Zebra has focused on supply chain resiliency since Trump's first term in office. It also has manufacturing operations in Vietnam, Malaysia, Taiwan and Mexico.
In another tariff-related move, Zebra raised prices in late April on most of its products in the U.S. by at least 10%, Winters said.
Production Shift Ahead Of Second Trump Term
SharkNinja, a maker of kitchen and household appliances, got ahead of the Trump administration tariffs when it started diversifying its manufacturing base five years ago.
"By the end of Q2, nearly 90% of our products will be able to be produced outside of China," SharkNinja Chief Executive Mark Barrocas told IBD. "By the end of the year, nearly all of our products for the U.S. will be able to be produced outside of China."
Most of the production it moved from China landed in countries in Southeast Asia, such as Indonesia, Malaysia, Thailand and Vietnam, he said.
SharkNinja's supply chain diversification was spurred by tariffs imposed during the first Trump term, Barrocas said.
"Tariffs went into effect shortly into the first Trump term, and we started making our first product outside of China four and a half years ago and steadily increased capacity and diversified the supply chain," he said.
SharkNinja would have continued its diversification effort even if Trump didn't win a second term in office. The shift from a reliance on China was "the right thing for us to do long term for the business," he said.
SharkNinja also has raised prices on some products to offset the impact of the tariffs. For instance, it increased the price of its Ninja Luxe Cafe Premier Espresso maker to $549 from $499. So far, the company has seen no degradation in demand for the popular product, Barrocas said.
GoPro Products Made In USA?
Other tech hardware companies are raising prices as well. Microsoft this month raised the price of its Xbox video game consoles and accessories.
Turtle Beach, a maker of gaming accessories such as headsets and controllers, started moving production from China to Vietnam during the first Trump administration. After the first quarter, less than 10% of its U.S. supply will be produced in China.
"Within this dynamic environment, we are assessing further supply chain diversification," Turtle Beach Chief Executive Cristopher Keirn said May 8 on a conference call with analysts. "Our production capabilities in China are primarily dedicated to producing goods for non-U.S. shipments that are not impacted by the tariffs. As part of our comprehensive mitigation activities, we are also evaluating pricing across all our product lines and selectively making necessary adjustments."
Sonos, a maker of premium audio gear, also has shifted most production of U.S.-bound goods from China. Vietnam and Malaysia are producing the lion's share of Sonos speakers and other products destined for the U.S. market.
Action camera maker GoPro has transferred production of U.S.-bound products from China to Thailand and Vietnam.
"We expect to offset tariff costs with modest price increases, continued supply chain diversification outside of China, and potentially with the production of certain products in the United States," GoPro Chief Executive Nicholas Woodman said on a May 12 conference call with analysts.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
