“How would Apple react to a Trump trade policy that punished it for manufacturing most of its products outside the U.S.?” David Pinsen asks via Seeking Alpha.
“A company like Carrier, which recently announced plans to shutter an air conditioner plant in the U.S., could decide to reopen that plant to serve the domestic market,” Pinsen writes. “But, as the FT suggests, Apple would face more challenges increasing manufacturing here: ‘Only one Apple product, the high-priced Mac Pro desktop computer, has its final assembly in the US today but the company sources several components domestically… Nonetheless, increasing its US manufacturing base has not been without challenges for Apple. In one high-profile case, in 2013 it invested $578m in an Arizona supplier of sapphire, GT Advanced Technology. But GT filed for Chapter 11 bankruptcy protection in 2014 after struggling to meet Apple’s production standards.'”
Pinsen writes, “If you’re concerned that the prospect of a protectionist U.S. President could start to weigh on Apple shares as Trump gets closer to winning the Republican nomination – or if you are just wary of a market pullback – consider a few different hedges for an Apple long position.”
Read more in the full article here.
SEE ALSO:
How Apple can comply with Donald Trump’s ‘Made in America’ directive – January 21, 2016
Apple CEO Tim Cook kicks off ‘Made in USA’ push with stunning, all-new Mac Pro – December 18, 2013
Apple expands ‘Made in USA’ efforts with sapphire glass factory in Arizona, creating over 2,000 jobs – November 4, 2013
As silly as this is since Trump doesn’t have the numbers to win even the nomination:
First Donald Trump just says whatever he believes his potential supporters want to hear. I don’t believe he will get the nomination, but if he did and an even bigger if he were to try to deliver on what he campaigned upon, the President can’t unilaterally enact tariffs. It would take legislation passed by Congress. Trump couldn’t get Democrays to go along and he’s not really a Republican (and don’t forget the GOP has free trade as part of their platform).
But hypothetically if all of this happened. Apple would be better off maintaining offshore production and facing the tariff penalties. When advertising the iPhone, Apple could advertise the price + X% “due to taxes enacted by the following people you should vote out of office:_____”.
It’s hard enough to hold on to your Senate or House seat running against human challengers. Try running against the iPhone and see how far that gets you.
What is good for Trump, is good for me. If that does not apply to you then you need to look at your assets and re-consider re-allocations.
With that said, many are confused by this election cycle. They think it is conservative vs liberal, or repubs against dems. It is actually about capitalism vs the government. Repub’s and Dem’s are the same, the only difference is their color and their mascot. They both want socialism. They being in control of education is the reason why brainwashed young people lean towards Sanders.
With that said, if Trump is allowed to enact his economic positions all at once it will kill the economy but he ain’t stupid. His plan, or execution of his plan, won’t be all at once and like you said, needs to go thru Congress if he obeys the Constitution, which he probably will.
With regards to the hypocrites, yes, that is you and me, we want low prices and we want to support American businesses. With a 35% tariff it will give companies something to consider and they will do what is best which is most likely make changes to stay competitive (ie capitalism). Apple will either bring more production into the States, find a loophole, implement more automation (which is the real killer of jobs), or something. Whatever Apple does will in the end benefit the American people, Is that not what you want? (how many on this board are proud of Apple’s high prices so the Android people can’t afford them – you snobs and hypocrites)
Apple does not say this phone costs 9% more because our state and local government collect sales tax so vote your governor and state representatives out of office. They just pass the cost on (or we accept it as a new normal). Apple could, but they don’t, say anything about passing on the cost of doing business like regulation costs, and property taxes, and payroll taxes, etc. They just pass it along to us as obedient tax collectors for the government.
By the same token, it is naive to think Apple will promote a similar stance against a tariff because in essence it says: “screw the American worker, we are going to continue building in China”. Apple will just be quiet and pass it along.
Once people figure out Trump is a Capitalist, the argument whether he is a conservative or a republican or a wolf in sheep’s clothing become moot. He is a deal maker and he will be able to move his agenda with no problems.
BTW, he has the numbers and Repubs have the enthusiasm. Obama’s reign and legacy has effectively been terminated.
“What is good for Trump, is good for me. If that does not apply to you then you need to look at your assets and re-consider re-allocations.”
I have no idea what you’re trying to say here. I’m financially very well off, own a stable business that employs others, and make far more money than I need to be happy… all without Trump.
“It is actually about capitalism vs the government.”
How is a 35% tariff supposed to be supportive of capitalism?
“His plan, or execution of his plan, won’t be all at once and like you said, needs to go thru Congress if he obeys the Constitution, which he probably will.”
You say that as if he would have a choice. It doesn’t work that way. The President can’t unilaterally pass laws. Any law (including taxes and tariffs) require Congress.
“With a 35% tariff it will give companies something to consider and they will do what is best which is most likely make changes to stay competitive (ie capitalism). Apple will either bring more production into the States, find a loophole, implement more automation (which is the real killer of jobs), or something.”
Forcing companies to alter their actions through taxation isn’t capitalism.
You make it sound like as if Apple just prefers offshore assembly and that they could just as easily assemble here. Read some articles on why assembly isn’t coming here any time soon. Apple would either remain offshore or find a loophole. “Or something”, what kind of BS argument is that?
“Whatever Apple does will in the end benefit the American people”
How does finding a loophole, remaining offshore, or “something” (lol), benefit the American people?
“(how many on this board are proud of Apple’s high prices so the Android people can’t afford them – you snobs and hypocrites)”
I don’t see that iPhones are more expensive than equivalent Android phones. But be that as it may… all smartphones as well as most other consumer electronics are assembled wholly or in part offshore. All face the same issues in terms of why they’re offshored and all would face the 35% tariff unless they found a loophole.
It just means higher prices for us all around even if hypothetically a company did manage to assemble domestically. Worse, the tariffs would be met with counter-tariffs from other countries. Say goodbye to exports and all the jobs related to them.
“Apple does not say this phone costs 9% more because our state and local government collect sales tax so vote your governor and state representatives out of office.”
No, because a total of 9% is reasonable and has been around long enough with public support so instead Apple says, $X plus sales tax… which varies by location all the way down to 0%.
On the other hand a 35% tariff on top of the sales tax is a huge increase that will have a direct impact on sales, and the policy could be changed through promoting action in the form of voting against the idiots who approved it.
“By the same token, it is naive to think Apple will promote a similar stance against a tariff…”
Americans overwhelmingly are opposed to tariffs. Google surveys on this issue. You really think Americans are going to be all “gee, I’m glad I’m paying 35% more for my consumer electronics that still are being produced offshore”.
“BTW, he has the numbers”
No he doesn’t. You probably thought he “won in Michigan” right? Nope. He lost. He got the most votes of any candidate, but that’s not enough.
Here are the numbers, and why he’s coming up short:
To get the nomination outside of a brokered convention, he needs 1,237 delegates. He has 458. There are 1,442 remaining which means he needs more than 54% of the remaining delegates to win. However, he’s only been getting less than 45% of the delegates to date. Even in Michigan, which was considered “a huge win” for him and where he campaigned heavily in a state considered to be one of his most favorable, he only got just over 42% of the vote.
If he does the same in the second half of the primaries (and polls show him doing worse), he’ll be 56% (or 1,384) below the number of delegates needed to win.
On the other hand, Cruz, if he picks up the percentage of supporters from Rubio and Kasich that polling suggests, he ends up with far more delegates than Trump and enough to get the total number to win.
Even if Cruz doesn’t get the number of delegates to win, going into a brokered convention, there’s no way Trump wins. He’s not a Republican.
“I have no idea what you’re trying to say here. I’m financially very well off, own a stable business that employs others, and make far more money than I need to be happy… all without Trump.”
Me, too, and good for you. Sounds like Trump won’t get in the way of your financial successes. Trump will be good for business and be good for the economy. That’s what I am saying. If he changes things for his personal interests it will be good for me cause I have the same interests and if you don’t then you need to change. Sounds like you have the same interests, though.
“How is a 35% tariff supposed to be supportive of capitalism?”
I did not say 35% tariff was about capitalism. I said this election cycle is about capitalism vs the government.
““… needs to go thru Congress if he obeys the Constitution, which he probably will.””
“You say that as if he would have a choice. It doesn’t work that way. The President can’t unilaterally pass laws. Any law (including taxes and tariffs) require Congress.”
He does have a choice. Ever heard of Executive Orders?
“Forcing companies to alter their actions through taxation [35% tariff] isn’t capitalism.”
It’s not “forcing”. Companies still have a choice to do many things. None of the options will cost the companies a cent because they will pass the cost along to us. A Mandate, as in ObamaCare is more like “forcing” although I suppose people can decide to pay a “fine” aka a tax. people just can’t pass the cost along.
“You make it sound like as if Apple just prefers offshore assembly and that they could just as easily assemble here. Read some articles on why assembly isn’t coming here any time soon. Apple would either remain offshore or find a loophole. “Or something”, what kind of BS argument is that?”
There are still a lot of US Companies that continue to manufacture in the US. Apple can do it because Apple is smart and in fact Apple does (eg Mac Pro) manufacture in the US. Anything is possible. Anything can change.
“Whatever Apple does will in the end benefit the American people”
How does finding a loophole, remaining offshore, or “something” (lol), benefit the American people?
Maybe finding a loophole does not help but remaining off shore still does because the tariff increases govt revenue so others can still live off the dole. Didn’t mean to put it that way but increases govt revenues so govt runs on a balanced budget and that will help generations of Americans to come. Don’t be so short sighted.
If they find a loophole then Trump et al is not different than any other politician. But we wont know till later.
““(how many on this board are proud of Apple’s high prices so the Android people can’t afford them – you snobs and hypocrites)””
“I don’t see that iPhones are more expensive than equivalent Android phones. But be that as it may… all smartphones as well as most other consumer electronics are assembled wholly or in part offshore. All face the same issues in terms of why they’re offshored and all would face the 35% tariff unless they found a loophole.”
Don’t get your point. But read the posts on MDN more often.
“It just means higher prices for us all around even if hypothetically a company did manage to assemble domestically. Worse, the tariffs would be met with counter-tariffs from other countries. Say goodbye to exports and all the jobs related to them.”
No doubt there will be unintended consequences. So what else is new? you got a better crystal ball than any body else? This is why things change because you can’t please everybody and eventually the old gets replaced with the new even if the new is the old-old.
BTW, I love inflation. That is when my net worth grew the fastest. Inflation is a debtor’s best friend.
“Apple does not say this phone costs 9% more because our state and local government collect sales tax so vote your governor and state representatives out of office.”
“No, because a total of 9% is reasonable and has been around long enough with public support so instead Apple says, $X plus sales tax… which varies by location all the way down to 0%.”
You missed the point and you missed the debate when sales tax was first introduced. You’re right, it’s the new norm in general but is never welcomed when it increases and no one says “boo” and that is my point.
“On the other hand a 35% tariff on top of the sales tax is a huge increase that will have a direct impact on sales, and the policy could be changed through promoting action in the form of voting against the idiots who approved it.”
Yes, that is correct. Again, you missed the point. Apple will not say anything in it’s promotional/advertising about the tariff.
““By the same token, it is naive to think Apple will promote a similar stance against a tariff…””
“Americans overwhelmingly are opposed to tariffs. Google surveys on this issue. You really think Americans are going to be all “gee, I’m glad I’m paying 35% more for my consumer electronics that still are being produced offshore.”
You’re right again, but you missed the term “hypocrites” in my post. People want to support their fellow man but don’t want to pay for it.
““BTW, he has the numbers””
“No he doesn’t. You probably thought he “won in Michigan” right? Nope. He lost. He got the most votes of any candidate, but that’s not enough.”
Michigan? The US is bigger than just Michigan and I just Googled it. What are you smoking?
“Here are the numbers, and why he’s coming up short:….”
Anyone can do your type of spin and you can replace Trump with any candidate and get the same conclusion. Your analysis is worthless but entertaining. Read my post: It doesn’t matter if Trump is a Republican or Conservative. That’s not what the movement is about. I say Trump is a Capitalist and that is fine with me. The movement is being against the establishment which means it is against the Republicans and the Democrats. We want our country back.
Bottom line. I’d be happy with anybody except an Obama replacement. However, Rubio is my last choice. Any of the other three would be great.
Still think Trump would be the best choice, though. He does what he says, he does it under budget, he does it right. Sure, he nor anyone bats 1000 but none of the others have that kind of track record. Cruz and Rubio have ZERO executive experience and I think they have both been tarnished by D.C. Kasich would probably be my second choice based on experience. JMHO
BTW: I’m not a Cruz supporter, but the numbers are the numbers.
Read thru our thread above. Thanks for the civil discussion. Helped me exercise my noodle.
I am not paranoid of Trump like others seem to be. If this country survives Obama then it will survive Trump or anybody else.
Hope we get a president that loves this country
… and God and the Constitution.
What has god got to do with all this?
It’s those damned “inalienable rights” that folk like Trump, Cruz, Hillary, Bernie or even Obama CAN’T take away!
“endowed by their Creator with inherent and inalienable rights”… Creator, there’s that God word again.
http://famguardian.org/subjects/politics/thomasjefferson/jeff0100.htm
Trump is full of hot air. The US has signed lots of free trade agreements, and is party to the World Trade Organization. Any move Trump made to make imports more expensive or subject to quotas would lead to action in the WTO and penalties. If the US then pulled out of the WTO American goods and possibly American companies may be banned from world markets.
It’s just NOT going to happen.
Indeed he will not be in any position to dictate to markets that are far bigger than his own these days and alienating them would be biting off your nose to spite your face as massive retaliation could cripple the economy not strengthen it. But fact is he would be a lame duck President unable to get support for these self destructive economic Policies in reality, the majority won’t be as short sighted and delusional as he,The main concern however is the worries on Wall Street and markets generally of the uncertainty that would generate and that could have World wide implications that would harm everyone, at least in the civilised World.
Trump’s in the business of being in business and his sole objective is to simply cash in. Then again, he is not the brightest bulb shining. I think he can win the presidency, but when he does, he’ll try to strip the US bare and then spit it out. He’ll be an economic wrecking ball.
Make that “socio-economic wrecking ball”.
Brilliant analysis PP, we’d do well to elect a virtuous prophet like you instead.
Oh, well. Apple’s share price has climbed a few dollars the past month or so. Now is a good time as any to short-sell this highly overvalued stock. It’s easier to short Apple and make money than to try and to short Amazon. There’s almost nothing holding up Apple’s shaky share price so Trump’s threats and the feds unhappiness can quickly send investors running for the hills. That’s the old Apple scare and dump in full effect. A hundred companies can have off-shore production but Apple will be the company easily singled out as being the worst offender.
/s
Trump is just what the Republicans needed.
I thought Trump wants to tax ALL imports by 35%, not just Apple products. Drumpf is just using Apple as an example because he knows many morons hate Apple and he is trying to get their support. If the whole thing is going to sink then all long positions should be hedged, not just AAPL. Matter of fact, any company on the brink and/or short of cash after the economy collapses could go under, so companies like AMZN or TSLA would be a better hedge/short.
And so will Mr. Socialist tax at a high rate, – not just the ultra wealthy people but the ultra successful companies. Apple has a target on its back by Sanders also.
Please cite the source of your narrative. Sanders has not proposed adding a massive tariff on imports.
He has spoken against completely tariff-free trade deals, but as a member of the WTO, the USA can abide by the rules of fair trade, which does have provisions for small tariffs and penalties. Far too complicated to discuss on this forum.
The USA would benefit by requiring its trading partners to uphold higher standards of ethics, accounting, child labor, environmental protection, and democratic representation instead of rewarding communist nations with completely free trade. Especially when these nations put up extremely high tariffs on goods shipped to them from the USA.
Fair trade is not the same thing as free trade. There must be requirements and rules to prevent further erosion of US manufacturing competitiveness to unfair competitors. Unlike Trump, Sanders suggests that the giveaways in the much-oversold free trade agreements have given away far too much US soverignty. Trump, on the other hand, thinks that rhetoric and threats will solve everything.
“Sanders has not proposed adding a massive tariff on imports.” Nah, just one on his supporters and everyone else should he win presidency.
“Hit everybody” and since when has “a little tax increase” remained little?!? https://www.youtube.com/watch?v=KN_l-SM__9k Those that buy that line, truly have no idea.
Remember, government can never do with less! It’s like, like… https://www.youtube.com/watch?v=TdUsyXQ8Wrs
Starring a cast of exciting young people as they were known in the ’50’s. Today they are known as Bernie’s Millennials or the next crop of young idiots with the right to vote. (hey, was one myself back in the 70’s, although not sure what designate we were given. Not Gen X, Y or Z that’s for sure!)
Thank you, I have recently been looking for info about this topic for ages and yours is the best I have discovered so far. However, what about the conclusion? Are you sure concerning the supply?