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GoPro will move some production from China to Mexico to avoid Trump tariffs

Shares of San Mateo-based action camera maker GoPro, Inc. jumped more than 7.5 percent in midday trading today, after the company said it would begin producing U.S.-bound cameras in Mexico in June, in an attempt to avoid President Trump’s escalating trade war with China.

GoPro shares began the month trading at around $5.85 per share, but crossed $7 per share today, representing a two-week gain of roughly 20 percent. The stock hasn’t traded above $7 per share since October.

The camera company said it’s activating a new production line in Guadalajara that will make cameras bound for U.S. retailers. Those cameras will begin appearing on store shelves in the third quarter.

“As stated previously, our decision to move most of our U.S. bound production to Mexico supports our goal to insulate us against possible tariffs as well as recognize some cost savings and efficiencies,” GoPro CFO Brian McGee said in a statement.

GoPro will continue manufacturing cameras in China, but will export those cameras to international retailers. The company initially announced the move in December, anticipating that the trade war with China might continue to escalate.

Their two weeks of gains stands in stark contrast with Cupertino-based iPhone maker Apple Inc., which has seen its shares fall more than 9 percent since the start of the month.

Apple’s supply chain is far more complicated than GoPro’s, and new tariffs on Apple’s entire product line could either eat into the company’s profit margin or get passed along to consumers in the form of higher prices.

Analysts at JPMorgan say Apple would need to raise consumer prices on the iPhone by 14 percent to maintain its existing profit margin, turning a $1,000 phone into a $1,142 phone, CNBC reports. Analysts at Bank of America estimate Apple would have to increase the retail price of the iPhone by 20 percent if it were to shift manufacturing from China to the U.S.

“We estimate the incremental cost of manufacturing iPhones in the U.S. could be 15-25%, and, if passed on to consumers could lead to demand destruction, in our view,” Bank of America analysts wrote.

Trump on Friday raised tariffs on some $200 billion worth of Chinese exports, and threatened to enact new tariffs on the remaining $325 billion of Chinese goods. China responded Monday with retaliatory tariffs on $60 billion worth of American exports.

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