HK may draw more American spenders as prices rise

Prices of iPhones are expected to rise as US tariffs hit Apple's major sources of production overseas.

And US visitors might end up buying phones and sneakers in Hong Kong as they are cheaper in the city than in America.

The latest tariffs promise to be the biggest test yet for Apple especially because they go beyond China and extend to the very countries the iPhone manufacturer has been shifting toward - new production lines in India, Vietnam, Malaysia, Brazil and Thailand.

Apple will have a big decision to make: Will it eat the costs of the tariffs, push suppliers to reduce prices, pass on the expense to customers or make further supply chain adjustments?

Apple is expected to do a combination of all four.

Moreover, since the debut of the iPhone X in 2017, Apple hasn't increased the starting price of its flagship model from US$999 (HK$7,792). There have been smaller adjustments, such as tweaking the amount charged for storage and introducing larger models like the 11 Pro and 12 Pro Max.

Legendary investor David Webb said that more Americans may come to Hong Kong for iPhones and sneakers as they are cheaper in the city, thanks to the lower production costs.

Peter Shiu Ka-fai, a member of the Legislative Council of the wholesale and retail functional constituency, agreed and expected that US tourists may be more willing to spend in the city.

BLOOMBERG AND STAFF REPORTER