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Apple has become the biggest casualty in Trump’s trade war with China – Fox News

PRESIDENT DONALD TRUMP’S ongoing trade war with China has claimed its biggest casualty yet – Trump’s favorite company outside of the Trump Organization. Apple.

After the close of trading on Monday, Apple issued a letter to investors that it would miss revenue estimates for its fiscal-first-quarter, an act it hasn’t done in a generation, largely placing the blame on the slowing Chinese economy and the trade tensions between the U.S. and China.

“China’s economy began to slow in the second half of 2018,” CEO Tim Cook wrote in his letter to investors. “The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States.”

Cook continued: “As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.”

It now expects revenue to be approximately $84 billion, down significantly from a prior outlook of $89 billion to $93 billion, issued just two short months ago.

It is unclear at this point what impact Apple’s warning about the softening Chinese economy will have on trade negotiations between the world’s two largest economies. Some have wondered whether it places more pressure on China to make a deal; or if it will cause the Trump administration, which has lauded Apple on several occasions for creating jobs and putting money into the U.S. economy, to reassess their stance.

Officials from Washington are scheduled to travel to Beijing early next week for meetings with their counterparts in hopes of resolving the dispute by March 1, when U.S. tariffs on Chinese imports are set to rise if a deal is not reached.

The White House declined to comment for this story.

Apple’s share price fell to a new 52-week low in early Thursday trading, down more than 8 percent, lopping some $50 billion off the company’s market cap. Following the news, Wall Street analysts rushed to cut their price targets, with several reaffirming Cook’s view that the trade war is severely impacting Apple.

Monness, Crespi, Hardt & Co. analyst Brian White, who is arguably Apple’s biggest supporter on Wall Street, wrote that the shortfall highlights “that much more sinister forces are at work here with the fingerprints of this country’s trade war with China written all over it.” White cut his price target on the stock, to $200, down from $300.

Cook primarily cited a weakening economy in China as the reason for the revenue shortfall and the environment sounds very bad there and obviously not being helped by the ongoing trade war or the rising prices of Apple’s products,” BTIG Research analyst Walt Piecyk wrote in a note to investors, while adding that the lack of subsidies offered by wireless carriers is also playing a role in Apple’s shortfall. Piecyk also lowered his price target on Apple shares to $197, down from $235 prior to the lowered guidance.

Over the past twelve months, Trump, and Cook have become intertwined over trade and tariffs, given the importance of China to Apple and Trump championing the tech giant for its contributions to the domestic economy.

During his State of the Union address in January 2018, Trump, who has repeatedly said “trade wars are good, and easy to win,” specifically mentioned that the Cupertino, Calif.-based company would invest $350 billion in the U.S. and hire an additional 20,000 workers.

In April 2018, Trump’s director of the National Economic Council, Larry Kudlow, specifically mentioned that Cook loved the tax cuts the Trump administration enacted in 2017.

“He said it’s great for business,” Kudlow told CNBC. “And Apple is going to be building plants, campuses, adding jobs, lots of business investment. That was the first point he made to President Trump.”

One day prior to Kudlow’s comments, Trump said that he was looking forward to meeting with Cook.

In May 2018, following his meeting with Trump, Cook expressed optimism (that has since waned) that the two countries would avoid a trade war. “I think my own view is that China and the U.S. have this unavoidable mutuality where China only wins if the U.S. wins and the U.S. only wins if China wins and the world only wins if China and the U.S. win,” Cook said after the company reported its fiscal second-quarter earnings. “And so I think there’s lots of things that bind the countries together and I’m actually very optimistic.”

Two weeks later, Cook took a harsher stance and said that he showed Trump why tariffs were not the right approach to resolving the U.S.’s trade issues with China.

In September 2018, the Trump administration exempted certain Apple products from tariffs it placed on products made in China, including the Apple Watch and its popular AirPods, The Wall Street Journal reported.

At the same time, Trump tweeted that prices on Apple’s products could increase because of the tariffs, but took the curious stance of offering a solution, one supplanted by a tax break that he had never mentioned before. “Make your products in the United States instead of China,” Trump wrote. “Start building new plants now. Exciting!”

Two weeks later, Cook took a harsher stance and said that he showed Trump why tariffs were not the right approach to resolving the U.S.’s trade issues with China.

In September 2018, the Trump administration exempted certain Apple products from tariffs it placed on products made in China, including the Apple Watch and its popular AirPods, The Wall Street Journal reported.

At the same time, Trump tweeted that prices on Apple’s products could increase because of the tariffs, but took the curious stance of offering a solution, one supplanted by a tax break that he had never mentioned before. “Make your products in the United States instead of China,” Trump wrote. “Start building new plants now. Exciting!”

Officials from the Trump administration are scheduled to travel to Beijing next week to meet with their counterparts in hopes of de-escalating the tensions prior to March 1, when tariffs on Chinese imports will rise.

On Dec. 29, Trump tweeted that he had a “very good call with President Xi of China” regarding trade talks and appeared to express optimism that a deal would get done.(By Chris Ciaccia | Fox News)

Link: https://www.foxnews.com/tech/apple-has-become-the-biggest-casualty-in-trumps-trade-war-with-china

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