Apple started its work week to news of its stock in freefall thanks to Sunday tweets by President Donald Trump threatening to tag more Chinese goods with a 25 percent tariff unless the two countries can reach a trade deal by Friday.
This may be just another Trump Twitter rant to put pressure on negotiations. But if he follows through on an additional $200 billion in goods, Apple may be forced to build iPhone, iPads, and Macs elsewhere.
….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019
Apple and other tech companies so far have been lucky in Trump’s aggressive campaign to get a new trade deal with China. Trump imposed 10 percent tariff’s on most Chinese goods with another $50 billion in imports at 25 percent.
Last year, Bloomberg reported Apple was drawing plans to shift iPhone production if tariff rose to 25 percent on electronics.
Apple has invested heavily in China, which serves as both a components supply chain and hub of manufacturing. A shift to another country is far more complicated than just switching factories.
During an upbeat Q2 earnings call last week, Apple CEO Tim Cook expressed confidence in growing its customer base in China and said his optimism was due in part to good negotiations between the U.S. and its adversary.
Heard it all before
Cook by now understands Trump’s negotiating style and is likely maintaining the necessary calm.
TIME magazine interviewed a pair of analysts, critical of Trump, but seeing his most recent Tweets as a bluff.
“The president treats this like we’re haggling over the price of a used car,” said Philip Levy, a White House economist for President George W. Bush.
Chris Rupkey, chief financial economist for MUFG Bank, wrote in a research note Sunday that the Tweets are likely to alarm investors.”When the president puts his foot down, it makes the market go down,” Rupkey said in the note obtained by TIME. “Tariff man is back just in time to make the stock market dive, dive, dive.”