As Trade War Escalates, Will Apple Weather the Storm? Experts Aren’t So Sure

Business September 9, 2019

It’s no secret that the United States is currently in a trade war with China, a situation that has heavily affected the stock market. While many firms are directly suffering as a result, experts in Wall Street are of the opinion that Apple will be the one company that weathers out this storm.

One of the said experts is J. P. Morgan’s Samik Chatterjee, who says that although the situation is not ideal and poses a risk for the revolutionary tech giant in terms of earnings, the company will pull through in ways most investors won’t see coming.

New iPhone Line

One of the reasons leading to J.P. Morgan and Chatterjee’s conclusion is the fact that Apple is set to release a new iPhone line later this month. According to the financial institution, Apple makes most of its revenue (approximately 55%) thanks to the iPhone. There’s no denying the phone is massively popular in the States and around the globe.

iPhones bring Apple most of its revenue

The China standoff and implementation of tariffs notwithstanding, Chatterjee opines that this launch will protect the company. Whichever way said tariffs are implemented, Apple will absorb their cost without even have to extend the expense to U.S. buyers. You’ll get to buy your phone at a non-inflated cost, a situation that the target market will certainly appreciate.

D.A. Davidson also has the same opinion as J.P. Morgan, with Tom Forte, an analyst at the firm agreeing that the China trade war does pose a threat to Apple seeing as the company gets its supplies from the East Asian country, and also has an enviable target market there.

All the same, he seeks to calm investors’ nerves, saying that AAPL may not be that hard-hit by the current situation. And the fact that the U.S. and China have agreed to trade talks in October, something good may come of it, and the war may not last till the end of the year.

Apple CEO Tim Cook with POTUS

Mitigating Tariff Impact

What’s more, Forte hails the company’s strategy in mitigating tariff impacts. They ensure they are in the government’s good books, and isn’t the government responsible for creating an enabling environment for this and all other companies?

The almost perfect relationship Apple has cultivated with the government has led to some of its products being excluded from tariffs in the past, and will allow it another opportunity to sell a new line of iPhones without being affected by current ones.

And interestingly, Forte also believes that the tech giant is big enough to also lobby the Chinese government and get some form of protection from tariff impact. What do you think?

Over a billion devices in use around the globe

Truth be told, the post-Steve Jobs era has been perfect for the company. Under Tim Cook’s leadership, Apple has held its own. Milestones have been achieved, and previous standoffs with China have come and gone, leaving the company holding its head high. Why would this one be any different?

But what would you expect of a company that three years announced that they had over a billion devices in use around the globe? That’s quite the consumer market!