Why Apple can end up benefiting from the trade skirmish

“There has been tumult in the market as the current administration and other trading partners ramp up their rhetoric on tariffs. We should see a trade skirmish instead of a global all-out trade war,” Rohit Chhatwal writes for Seeking Alpha. “This trade skirmish will help Apple to lobby against high tariffs on its products, which can be as high as 45%.”

“Apple can end up as one of the biggest winners in the current rhetoric about tariffs between U.S. and its trading partners,” Chhatwal writes. “Currently, the tariff on Apple’s products is very high, even among the allies of U.S. which ends up hurting the unit sales. The war-of-words between different countries on tariffs can allow Apple to put its case for lowering the taxes on its own products in international markets. If Apple is able to negotiate for lower tariffs on its own products, it will provide a good boost to its market share in international locations.”

“U.S. had a trade deficit of $151 billion with European Union in 2017. A big part of the blame is currently put on the unequal import tariffs between the two trading partners. U.S. has an import duty of only 2.5% on European cars, whereas cars shipped from U.S. to Europe face a 10% import duty,” Chhatwal writes. “If the huge trade deficit of $150 billion between the U.S. and Europe is to be narrowed, then reducing the tariffs on Apple products will be more successful instead of bringing import tariff parity on cars. Reducing the import tariffs to 2.5% on cars sold from U.S. to Europe instead of the current 10% will only marginally help the U.S. exports. On the other hand, reducing tariffs on Apple products from 35% to 15% can produce a much bigger swing in the trade deficit.”

“The question is whether Apple has the requisite lobbying power to bring its own tariffs on the table in the recent tariff argument,” Chhatwal writes. “It is difficult to quantify the leverage Apple has over the current administration in the White House. I believe the ‘soft’ leverage of Apple is very high. Having a ‘Made in U.S.’-marked iPhone could be seen as a great achievement of a White House administration. Apple should certainly be able to use this soft power to lower the tariffs on its products, especially as it ramps up manufacturing within the U.S.”

Read more in the full article here.

MacDailyNews Take: Apple shareholders could see a nice benefit if tariffs on Apple products are reduced.

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