Of all the major US multinationals that do business in China, Apple is in a particularly precarious position: iPhones sold in the US will be subject to the new tariffs, since Apple builds most of them in China, while Chinese consumers – whom the company has come to depend on for sales growth – could shun the brand as the trade war intensifies.
Analysts at JP Morgan recently calculated that Apple would need to raise prices on iPhones sold in the US by 14% to offset the new tariffs.
But with the market focused on the ‘next billion users’, falling victim to a consumer boycott inspired by the Trump administration’s ‘blacklisting’ of Huawei would likely be more painful for Apple shareholders – the hit to Apple’s market cap this week could be just the beginning.
Most who have held the stock since at least the end of last year probably remember how Apple single-handedly tanked the market when it cut its quarterly revenue guidance for the first time in 16 years, citing weaker than expected iPhone sales in China.
Offering an assessment that he might soon regret, Apple CEO Tim Cook told analysts late last month during the company’s quarterly earnings call that sales in China were picking up. Apple shares rallied after-hours that day after Cook assured investors that the trade dialogue between Washington and Beijing had “improved” and that this