As the U.S. markets continue to fall today, with the Dow having lost more than 400 points on Trump’s trade war provocations and threats of another $200 billion in tariffs on China, a silver lining emerges for Apple, which is rumored to be giving a stay of execution for its China-assembled iPhones.
The New York Times, citing unnamed sources, is reporting that Trump has promised Apple that tariffs would not be levied on iPhones assembled in China following an apparent visit to the White House last month by Apple CEO Tim Cook.
According to NYT, Cook hit up Washington last month with warnings of the negative impact of Trump’s trade policy on China.
Neither Apple, nor the White House have independently confirmed the NYT report.
As so far, Apple stock is down with the rest:
(Click to enlarge)
Until last week, Trump’s proposed China-targeted tariffs list, revealed in April, had left out consumer electronics, to Apple’s victory; however, a new list has now emerged. It’s bigger and broader, and now includes chips in a move that has the U.S. tech sector squirming.
After all, the bulk of the China tariff battle was about securing American dominance in the tech sector, and now the opposite appears to be in the cards.
Yesterday, Trump threatened to impose a 10-percent tariff on a whopping $200-billion in Chinese goods in a tit-for-tat move that follows Beijing’s own decision to raise tariffs on $50 billion in U.S. goods. That, in turn, followed an announcement by Trump last Friday of a similar amount of tariffs on Chinese goods … Related: Banks Spent $1.7B On Blockchain Last Year
Following up on his Monday threat, Trump stated: “After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.”
Beijing has called the move “blackmail”.
So what about Apple, then, the most successful U.S. tech firm in China?
A technology war that is all about trade is a disaster for Apple because China accounts for almost 20 percent of its revenues—or $44.7 billion in 2017. Apple has some 40 stores in China, and last year reportedly shipped over 41 million iPhones into China.
And it’s not just about iPhones; it’s about services, a segment Apple is pushing hard as smartphone sales slow.
Assurances from Trump won’t be enough to avoid a disaster for Apple, though, because there are two sides to this trade war battle, and Beijing’s response could spell trouble.
China could respond to Trump’s provocations by targeting Apple’s suppliers under the pretext of national security. Beijing could also halt Apple’s services with a ban, and it would be the first time. The same thing happened in 2016 with iBooks and iTunes Movies.
Perhaps the biggest threat is the push this could give to Apple’s Chinese rivals, Xiaomi and Huawei, the latter already reeling from Washington’s moves to push it out of the U.S. market, and ready for retaliation. Beijing’s ultimate move would be to do to Apple exactly what Washington has done to Huawei.
By Josh Owens for Safehaven.com
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