“It’s clear from Trump’s post-tax-cut shift to correcting imbalances in global trade — something Trump has cared about for a lot longer and with a lot more passion than tax policy — that an evolving definition of national security is a geopolitical and stock market risk,” Eric Rosenbaum reports for CNBC. “The real threat from the new metals tariffs is that a broader, global trade war would have unintended and unpredictable consequences. And in the stock market context, a national security-defined trade war could be more significant — and harder to account for — in the market’s best and most widely invested sector: technology.”
“The damage could be much bigger than the ’rounding error’ within Apple earnings from the steel and aluminum trade penalties,” Rosenbaum reports. “Intel chiefs have long warned about Chinese telecom company ZTE and its telecom infrastructure equipment. The U.S. government has also long referred to Huawei as ‘effectively an arm of the Chinese government’ …But the warnings previously had not been taken to the level of the smartphone itself, which puts this national security dust-up squarely in the sweet spot of the market’s most beloved stock, and a stock whose fortunes are increasingly tied to sales in China: Apple.”
“Many China analysts believe it’s the Chinese government that has had this coming, because when it comes to technology, China’s own practices reflect the broader claims about ‘unfair’ trade policies,” Rosenbaum reports. “Scott Kennedy, deputy director at the Center for Strategic and International Studies… does not think Apple is a good target for the Chinese because Foxconn City in Shenzhen, China employs up to 400,000 people (though exact numbers are hard to get) and is supported by the Chinese government, and is possibly the largest factory in the history of the world. There’s U.S. geography to consider as well. Foxconn has started construction on a large plant in Wisconsin, since Trump was elected. Punishing Apple may not make much sense either… Derek Scissors, American Enterprise Institute resident scholar and China expert, said he also believes Apple’s contractor in China employs too many Chinese citizens for the tech giant to be a direct target.”
Tons more in the full article – recommended – here.
MacDailyNews Take: With so many moving parts, we’ll have to wait to see how it all shakes out.
Analyst: President Trump’s tariff impact on Apple would be just a ’rounding error’ – March 7, 2018
Apple and other tech firms caught in crossfire as U.S.-China trade war looms – March 7, 2018
Apple Macs caught up in President Trump’s aluminum tariff plan – March 2, 2018