Apple Inc. (NASDAQ:AAPL) stock suffered losses on Monday after a warning that the President–elect Donald Trump might go ahead with the campaign threats about imposing new tariffs on China, says Reuters. Apple’s stock fell by 2.5% on Monday, increasing its loss to almost 5% since last Tuesday, compared to S&P 500’s 1.16% advance.
Since Tuesday’s election, several major tech stocks including Amazon, Alphabet and Facebook witnessed huge sell-offs as investors shift funds into financial and public works companies that would benefit from deregulation and infrastructure spending under President-elect Trump.
China warns Trump
The concerns of Apple Inc. (NASDAQ:AAPL) investors heightened after a warning of ‘tit-for-tat’ retaliation in an op-ed in the China-backed Global Times on Sunday, in case Trump chooses to follow through on a campaign pledge to impose 45% on all imports from China.
The op-ed said, “A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted.”
The op-ed says that Trump should back off from any planned sanctions on China. And, instead should keep the current trade scenario, which will be a ‘win-win’ for both. The editorial promises that if Trump tries to wreck Sino-US trade, then a number of US industries will be impaired.
And, “Finally the new president will be condemned for his recklessness, ignorance and incompetence and bear all the consequences,” the editorial said.
Apple is already disappointed with China. The US firm has failed to get the rapid growth it was hoping for from the country, which would have made up for slower iPhone sales in the US and other mature markets. In China, its revenue declined by 30% in the September quarter, worse than a 7% decline in the US.
Will it really hurt Apple?
Jun Zhang – an analyst with Rosenblatt Securities – said that potential trade conflicts and country’s weakening currency might hurt Apple China sales. Zhang believes that the iPhone sales in China declined in October even after it fixed the issues that were affecting the iPhone 7 Plus device.
However, Daniel Morgan – a Senior Portfolio Manager in Synovus Trust Company – issued a note that investors should not take the Trump’s campaign trail threats against China very seriously in the short-term at least. “You just don’t just jump in and start rewriting trade agreements,” the analyst said.
Apple Inc. (NASDAQ:AAPL) now suddenly finds itself in the midst of Sino-Trumpian war of words. Now, CEO Tim Cook must be wondering what actually he did wrong to find his company dragged in this political war. It must be remembered that he recently issued a letter to his employees, in an effort to ease anxiety over the election.