US-China trade war threatens to bite into Apple profits

As we reported last week, President Donald Trump met Apple CEO, Tim Cook, at the White House, to discuss business affairs. The US and China continue to bicker over trade tariffs and this is bad news for the Cupertino tech titan. The People’s Republic is responsible for the manufacture of the majority of Apple products, so trade tariffs would be damaging. Apple’s proposed $350 billion investment into the US economy is also likely to have been on Mr Cook’s agenda. The Apple boss may have sought reassurances against any commercial fallout from the confrontation between the two countries. Apple generated over $18 billion in the previous financial quarter from Chinese trade, so the stakes are high.

Friends in high places

Mr Cook recently attended state dinners with President Trump and French President Emmanuel Macron. Whilst such familiarity draws media criticism, Trump and Cook need each other. Apple’s massive investment would be seen as a glowing validation of the President’s hardline trade policies and would detract from limp US employment figures.  Likewise, Cook needs the US-Chinese economic time bomb to be defused and quickly. According to the Financial Times, Apple’s shares lost $60 billion (2.8%) in the last two weeks on the fear of slumping iPhone sales. Therefore, Cook must manipulate his relationship with the Oval Office to full effect. CNN Money also reports that the Trump team are heading to China this week, as trade hostilities gather pace.

Fingers crossed on that one.

Working visit

It was announced this week that President Trump will visit the United Kingdom on a ‘working’ visit in July. The bilateral talks with British Prime Minister Theresa May will discuss the Anglo-American stance on the inflammatory Korean Peninsula issue. Close ties with global heavyweights that are focusing on the Asian political arena should work in Mr Cook’s favour. His task is to handle these powerful alliances with a deft expertise before the proposed tariffs eat into declining iPhone sales. The Apple Watch is ticking.

What do you think? Can Tim Cook turn the economic tide, with a little help from his friends?

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