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• 00:00It’s terrible, right? But Apple has the pricing power, the consumer influence, the economic influence. They have the supplier relationships. They have a lot of leverage over their main manufacturing partners. Where I don’t think Apple is going to need to eat the majority of the costs here. I think they’re going to really split it between themselves just a little bit. They’re going to split it with the consumer and they’re going to make their suppliers pay some of it. Right. Don’t forget, it’s Foxconn and some of their other final assembly suppliers that are exporting these things into the US. And they have so much margin, they have a little wiggle room to play with from the get go anyways. Now, the big picture here, though, is that Apple has spent years diversifying its supply chain in an effort to try to avoid situations like this. Not saying it backfired, but it didn’t work out as they probably would have hoped the tariffs against people had expected for years. They’re not really China centric, Right. China is just one piece of the pie here. You have major terrorists and you’ve been talking about all day in India. You have them in Vietnam, you have them in Malaysia, you have them in Thailand, Taiwan. All the players here in the Apple supply chain are impacted. So let’s think about this from the perspective of prices that hit consumers. Mark, if you say it’s going to sort of be buffeted by it by everything, do you expect Apple to raise prices as a result of these tariffs? I do think that Apple will raise prices. I really do. I do think ultimately all of the consumer hardware players are going to need to raise prices, too, at some point. The question is when they’re going to do it and how much they’re going to do it, not if they’re going to do it. Okay. When typically do they raise prices? If you’re talking about the iPhone, would prices like do they ever raise prices mid-cycle for something? Has that ever I don’t want to say has that ever happened but typically has happened. It has happened. Yes, it has happened. How does that how did that happen last time? It’s the thing that you have to step back and be very clear about. This has not happened in the US. Okay. Right. This has happened in Japan. This happened with Brexit in the UK. It’s happened with Australia. This happened with other countries in the European Union. So there is precedent for out of cycle price changes, just not in the U.S.. Does it mean China’s business? Apple’s business in China is even more threatened right now. Does it mean Apple’s business in China is even more threatened? I actually think it means a little bit of the opposite. I think it means that Apple’s business in China is even more important to them because these things are being built in China and they’re being exported now. They’re not having to be exported. They’re being built in China and sold in China. So really, if you want to sell even more stuff in China right now to make up for the impact externally, I am curious what you make of, you know, if there’s anything more. CEOs in this case, Tim Cook and Apple can do. I mean, he showed up at the inauguration, I believe, personally donated to the inauguration earlier this year. He talked about investing, what, like half a trillion dollars in the U.S. over the next four years. We talked about that because I think there was already money committed. I mean, not enough. What is it that the president may be looking for these from these companies or it has nothing to do with them? I mean, does he care about the health of a company like Apple? It’s mind boggling. So he’s putting in these tariffs. They start on the ninth. Right. These these big tariff increases start on the ninth. Okay. That that’s one thing to impact here. But it takes a lot of time to make these supply chain adjustments. The whole point of these tariffs is to get people to build things in the U.S. But there’s not enough time to have those movements be made in the supply chain. Just go ahead, Carol. I know. You know, it’s just. No, no, no. It’s just it’s just kind of fascinating. Like I said, you know, I just think of the inauguration and all those tech CEOs there and very visible, very prominent. And then, you know, just wonder about the relationships, the conversations. Do we assume do you hear that that Apple is continuing to have an ongoing conversation with the administration at this point? I’m sure that Apple is trying to get exemptions here, right? I’m sure they’re having these ongoing conversations. But there’s a point where you’re just going to have to raise prices and not in order to not eat into your margins and screw up your quarter. Right. I mean, they’re very important times for Apple right now. And so I think definitely there are going to be price adjustments, cash cushion, like I said. Yeah. What about the cash cushion that that Apple has? If they view this as temporary, could they just eat into the cash cushion that they have? I don’t think they should eat into it. But yes, they have high margins. Yes, they have a cash cushion. Right. But they also have a business to run and they don’t want to adjust their business. So I think that you’re going to have to see price increases. It is amazing just to take a step back here that Apple has not increased prices over the last several years in the U.S. given the inflationary pressures, given everything else going on. Right. So really, we’re in a territory in a time where Apple probably should be raising prices anyways, right, from a business standpoint. So this gives them a perfect excuse to do it.