While the US/ China trade war rages on, analysts are debating the impact on one company in particular. Apple (AAPL – Research Report) recently released a filing with the US Trade Representative on the proposed US tariffs of $200 billion on Chinese goods. The filing revealed how Apple saw the tariffs impacting a “wide range” of goods including the Apple Watch, AirPods, Beats, and other smaller product lines.
But the iPhone cash cow was notably absent from the list. As was the iPad. “Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers,” Apple said.
Bear in mind the iPhone made up about two-thirds of Apple’s $229 billion in revenue in the most recent fiscal year. Meanwhile, the products referred to in the filing are estimated to account for only about 5% of Apple sales in FY19. So what are the experts saying about Apple’s exposure to China tariffs? Especially when it comes to one of its most lucrative products… let’s take a closer look now:
Look out Apple!
Charter Equities’ Edward Snyder sees economic weakness in China as likely the biggest impact of the trade war on Apple.
“China’s heavy dependence on exports to the U.S. makes the trade war an asymmetric fight that is punishing China’s economy more than the U.S.’s (if at all)” the firm’s managing director writes. “China’s already seeing an impact on economic growth which, if it continues, will undercut domestic demand for all goods, including iPhone XS.”
“This is the most likely impact to Apple, the extent of which won’t be known until mid-December when the fans have gotten their fill of the new phone and demand shifts to the larger base of subscribers.” He sees punitive actions on specific companies as highly unlikely, especially with China trying to lower- rather than escalate- tension.
