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U.S. Raising Tariff's on China Could Reverse Apple's Positive Position on China's Consumer Confidence

1 x cover trump trade threat #2


Two weeks ago the U.S. Trade Representative's Office warned that China had to do more to prevent intellectual property theft, stating that country has not implemented any reforms and remains a "hazardous and uncertain environment" to operate in. A US Trade Representative official indicated that the Trump administration could pursue additional tariffs against China if reforms don't happen. As of midnight, new U.S. tariffs on China were imposed, in-part due to the Intellectual Property issue. This could effect Apple's product pricing should the tariffs stick for any length of time, but it's a little too early to speculate how this may all play out.


The New York Times (NYTimes) reported last night that "The United States and China were nearing a trade deal last weekend that would lift tariffs, open the Chinese market to American companies and strengthen China’s intellectual property protections. The discussions fell apart last weekend, when China called for substantial changes to the negotiating text that both countries had been using as a blueprint for a sweeping trade pact."


While Democrats will try to blame President Trump, the blame has to be squarely on China who has imposed far more tariffs on US products than the US on products from China. The NYTimes chart below clearly points that fact out. The US is standing up to China as they should. The Chinese PR machine is out in full force trying to make the Chinese out to being the reasonable party in the negotiations while the truth is simply the reverse.


2 X NYTimes Chart on Tariffs where china imposes on the US is unreal


President Trump stated that "We were getting very close to a deal then they started to renegotiate the deal. We can’t have that.


The NYTimes report further noted that "An administration official said that this round of talks had the dour feeling of heading toward a breakup. There is a growing sense of disappointment in Mr. Xi being unable to follow through on things that Mr. Trump’s trade negotiators thought had been addressed."


President "Trump’s decision to impose 25 percent tariffs on nearly one-third of all Chinese products is the biggest trade action that Mr. Trump has taken so far. The higher tax hits many consumer products that Americans rely on from Beijing, like seafood, luggage and electronics, raising prices for American companies and their customers across a large portion of sectors."


In September 2018 Apple's CEO said in a letter to the U.S. trade representative that the trade war with China would put his company squarely in the crosshairs.


Cook further noted at the time that "It is difficult to see how tariffs that hurt U.S. companies and U.S. consumers will advance the Government's objectives with respect to China's technology policies. We hope, instead, that you will reconsider these measures and work to find other, more effective solutions that leave the U.S. economy and U.S. consumer stronger and healthier than ever before."


Of course the President has to act on behalf of all American companies and the fight over intellectual property is more important in the big picture than worrying over Apple having to raise prices on products.


While Trump did raise tariffs, Apple products seemed to escape round one. But now that round two has kicked in, Apple's products may be effected and possible anti-American sentiment in China may reverse itself.


Apple's CEO made a big point in Apple's latest Financial Conference Call. Specifically, Tim Cook officially stated that in point number "four, there is an improved trade dialogue between the US and China and from our point of view this has affected consumer confidence on the ground there in a positive way. And so I think it's a set of all of these things and we certainly feel a lot better than we did 90 days ago."


If there isn't a turn around in the trade talks today, then it's certainly possible that the tariff situation could effect Apple's pricing at some point in time as well as Cook's upbeat statement for the current and future quarters. Will Wall Street have to rethink their position on AAPL stock? Only time will tell.


For now, it's a little too early to speculate how this will play out or if it will play out until the dust clears. Presently Apple's stock AAPL isn't being affected much with pre-market at -1.42/share  (it will fluctuate throughout the day using this link to verify).


10.0F - Apple News Bar

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