How Apple Could Be Affected By The Trade War

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The US Government’s moves against Huawei have had rippling effects on other big tech companies.

The inflamed trade-based tensions between the US and China are causing more economic uncertainty with every protectionist move made by either side. The recent news at Huawei wasn’t taken well in China, and big tech companies on both sides of the Pacific are taking a particularly hard hit right now.

The US blacklist on Huawei could spark similar retaliatory moves from Beijing. Among the US companies already caught right in the middle of the trade war, there is Apple, which stands to lose a lot should relations between the world’s two largest economies fail to improve. While Google will have another 90 days to wrap up its business with Huawei (though even this could change), there will be more uncertainty going forward.

According to a note from Goldman Sachs sent to investors, if China banned Apple, the company’s bottom line would drop by up to 29% (approximately $3.35 per share). The Chinese market is responsible for 17% of Apple’s sales and profits, and Apple shipped about 39 million iPhones to Greater China in 2018, with 83% of these making it to the mainland. On top of this, most of Apple’s supply chain is based in China, which is a cause for concern when serious tech and telecom companies are in the crosshairs. The Goldman Sachs note alluded to the power that Beijing has over Apple.

“Should China restrict iPhone production in any way, we do not believe the company would be able to shift much iPhone volume outside of China on short notice, though actions that would push Apple production outside of China could have negative implications for the China tech ecosystem as well as for local employment,” wrote Goldman Sachs analyst Rod Hall. Although a new trade deal between the US and China seemed imminent just weeks ago, talks fell through and the trade war has expanded significantly.

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