Apple Could Receive Tariff Exemption from Trump

November 21, 2019
299 Views

With the trade war looking far from over, American companies are starting to feel the pressure. In the case of Apple Inc. (NASDAQ: AAPL), potential tariffs on the horizon could erode the bottom line and increase costs for consumers.

Although Apple has some manufacturing presence in the United States, almost all of the company’s iPhones are manufactured in China.

In a recent visit to Apple’s Mac Pro factory in Austin, Texas, President Trump said that he was “looking” into an exemption for Apple. This could protect the company from future tariffs, no matter which way the trade war goes.

Apple Needs Parity With its Closest Rival

Giving an exemption to Apple would make sense. As an American company, is actually at a disadvantage to Samsung, its closest rival.

Samsung is based in Korea, a country that has a favorable trade deal with the United States. Future Chinese tariffs could potentially damage Apple’s business, leaving its offshore competitor to take advantage. This is obviously something that both Apple and President Trump want to avoid.

Trump spoke from the factory, saying that “The problem we have is, is you have Samsung. It’s a great company, but it’s a competitor, and it’s not fair. We have to treat Apple on a somewhat similar basis as we treat Samsung.”

While Trump does seem to be at least somewhat sympathetic to Apple’s position, he also reiterated a message that he has carried throughout his presidency. Standing next to Apple CEO Tim Cook, Trump told reporters that “When you build it in the United States, you don’t have to worry about tariffs.”

Trump’s Comments Could Strengthen Stock Confidence

Apple is already the most valuable company listed on the stock market. With a market capitalization of $1.18 trillion, it narrowly sits above Microsoft.

Recent comments from Trump will give confidence to investors. Even if a trade deal is not reached with China and tariffs continue (or even escalate), it should be protected. The President cannot risk compromising when it is directly responsible for 80,000 jobs in the U.S., and indirectly responsible for up to 2 million more.

Stock has been soaring lately, with 23.88% growth over the last three months. Investors who are concerned about Apple’s vulnerability to the trade war may now wish to rethink their positions on this company.

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