Apple Inc. (NASDAQ: AAPL) has reportedly been told by president Donald Trump that it will be exempt from any new tariffs implemented by the government. According to a report in The New York Times, Apple CEO Tim Cook visited the White House in May to talk to the President about his fears that tariffs would hurt Apple products.
In an ongoing saga of trade disputes, President Trump has threatened China with an additional $200 billion in tariffs on goods arriving in the U.S., after China prepared retaliatory tariffs over the weekend. Taking it yet a step further, Trump has told China that if they retaliate again, there will be another $200 billion in tariffs to come.
Apple Products Caught in the Middle of the Politics
All of this happened within the space of a few days, showing just how quickly the political and financial landscape can change. Although investors have been largely dismissive of the ‘trade war’ in recent weeks, they are now taking notice. Stock indexes across Asia dropped significantly on Tuesday, and even Wall Street stocks are down ahead of Tuesday morning in the U.S.
AAPL stock is also down, with a 0.22% loss following Monday’s trading.
Apple generates around 25% of its revenue from China, a market that is continually growing. Analysts believe that the Chinese government could pressure Apple and the United States by interrupting supply chains with regulatory hurdles. iPhones and other Apple products are made in China, with most of the components used also coming from Chinese suppliers.
Apple is the world’s most valuable publicly traded company, and President Trump could find it difficult to deal with the backlash if his ongoing trade disputes mean that investors lose money. Apple’s market capitalization of $928.17B means that there’s clearly a lot at stake for investors at every level.
How Far Will the Trade Disputes Go?
China has shown with previous rounds of tariffs that it is willing and able to retaliate to U.S. pressure. With President Trump quoting big numbers in his latest threats, it will be interesting to see how China responds. It is possible that to avoid a full-blown trade war; China could offset their losses through other avenues. Interrupting Apple’s supply chain is one way to create indirect diplomatic pressure. The Chinese government already appears to be interrupting the clearance of Ford Motor Vehicles that have arrived in the country for sale.
You may be interested
Job Hiring is Picking Up as Employers and Consumers Gain ConfidenceLamont J - March 29, 2021
The recent government stimulus for small and medium-sized businesses, personal stimulus checks, and declining Coronavirus cases, are all great news…
Fed Could Maintain 0% Interest Rate Until 2024Adam R - March 26, 2021
The Federal Reserve is holding its target interest rate in a range of 0.00% - 0.25%, even while the economy…