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.”

Apple CEO Tim Cook and U.S. President Donald Trump at tech summit in June
Apple CEO Tim Cook and U.S. President Donald Trump at tech summit in June 2017
“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.

Apple CEO Tim Cook heads to China as President Trump orders 25 percent tariffs on up to $60 billion in Chinese imports – March 23, 2018
BoA Merrill Lynch: Apple is prepping a ‘foldable’ iPhone; U.S. and China trade tensions not an issue for Apple – March 23, 2018
Designed in California. Assembled in China. How Apple’s iPhone skews U.S. trade deficit – March 21, 2018
President Trump blocks Broadcom-Qualcomm deal over China concerns – March 13, 2018
Elon Musk sides with President Trump on trade with China – March 8, 2018
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
Apple CEO Tim Cook pressured to follow Elon Musk and leave President’s Council over Paris Agreement kerfuffle – June 2, 2017
Apple CEO Cook calls President Trump as Elon Musk threatens to quit White House advisory councils over Paris decision – May 31, 2017


    1. …as well as Chhatwal.

      I’m sorry, but when a cited ‘fact’ that supports the argument is grossly incomplete, the logical construct fails.

      In this case, while mentioning the 2.5% import tariff on EU automobiles, Chhatwal has -somehow- forgotten the infamous “Chicken Tax” by which the USA imposes on Europe a 25% import tariff on Light Trucks … which yes includes SUVs.


      And that’s not even considering the current political terrain, which is that tariffs are in all likelihood going to get markedly WORSE, not better.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.