President Donald Trump’s Huawei sanctions could result in the Chinese government hitting American companies, including Apple hard, new reports claim.
Fresh reports by the Washington Post, Global Times and Daily Mail say China could launch “rounds of endless investigations” on U.S. firms operating in China. These will have the effect of “[dampening] investors’ confidence” and squeezing the income of these firms in the China market.
Apple is one of several U.S. giants that is enormously reliant on China for both manufacturing and sales. Apple CEO Tim Cook has talked in the past about China being Apple’s future biggest market. If China delivers on its threats, the country could add Apple to an “unreliable entity” list.
At the end of last week, U.S. Commerce Secretary Wilbur Ross said America will stop any company around the world from using U.S. equipment, IP or software to work with Huawei. This could have a significant impact on Huawei’s supply of much-needed components and semiconductors.
The move could cost U.S. chipmakers around $35 billion in lost revenue. But it also could prove catastrophic for Huawei. This is the latest in Trump’s series of clashes with China over trade. Recently, he has also been vocal about China’s culpability in the coronavirus pandemic spread.
Apple: Trying to navigate challenges in China
This situation could hurt Apple in a big way. The company has, in the past, walked a fine line in order to do business in China. The company’s controversial moves include switching local iCloud accounts to a China-based server and removing the Taiwanese flag from its keyboard.
“Apple justifies acceding to despotic demands by arguing that it is the cost of operating in China, and that the Chinese people are better off with a big U.S. firm around than without,” reads a weekend editorial published in the Washington Post.
This isn’t the only White House edict that has the potential to hurt Apple. Last week, Trump proposed a new tax that would incentivize companies to produce 100% of their products in the United States. This could involve fining those that don’t, which would almost certainly include Apple.