“A sharp drop in Chinese economic growth will hit the profits of U.S. firms but sales by Apple Inc and other American companies should recover once Washington strikes a trade deal with Beijing, a senior White House adviser said on Thursday,” Doina Chiacu reports for Reuters. “”
“‘If we have a successful negotiation with China, then Apple’s sales and everybody else’s sales will recover,’ White House Chairman of the Council of Economic Advisers. Kevin Hassett said in an interview with CNN,” Chiacu reports. “Hassett said Asian economies including that of China have been slowing quite a bit since last spring and that China is ‘feeling the blow’ of U.S. tariffs.”
Chiacu reports, “‘That is having an impact on earnings and it’s not going to be just Apple,’ Hassett said. ‘I think there are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year until you know we get a deal with China.'”
Read more in the full article here.
MacDailyNews Take: Judging by Apple’s warning, President Trump’s tariffs on China that went into effect on September 24, 2018 are having their desired effect – to get China to the table with urgency to work with the U.S. on the trade imbalance between the two countries.
No pain, no gain.
The tariffs are not the end game. They are bargaining chips and, due to the trade imbalance, the U.S. has 376 billion more chips with which to play than China ($506B – $130B)… China’s running out of chips already. This initial negotiation phase too shall pass. The end result will be better than the starting point.
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If you look at our results, our shortfall is over 100% from iPhone and it’s primarily in greater China. And so as we look at what’s going on in China — it’s clear that the economy begins to slow there for the second half. And what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy… I’ve had obviously many, many discussions [with the Trump administration] over the course of many months to be constructed and to give sort of my perspective on trade and the importance of it to the American economy as well. And I feel like I’m — that I’m being listened to in that respect. And so I’m actually encouraged by what I’ve heard most recently coming from the U.S. and from China and hopefully we’ll see some changes. – Apple CEO Tim Cook, January 2, 2019
The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!
— Donald J. Trump (@realDonaldTrump) June 24, 2018
I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018
At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006
SEE ALSO:
David Rubenstein: US-China trade dispute is a ‘skirmish, not a war’ – October 9, 2018
Trump administration to spare some Apple products including Apple Watch, AirPods, and HomePod from latest China tariffs – September 17, 2018
China’s stock markets down as President Trump said to ready new tariffs – September 17, 2018
Cramer: Here’s why China won’t boycott Apple as part of its trade war with the US – August 7, 2018
Apple could be used as a ‘bargaining chip’ in the trade war, Chinese state-run media warns – August 7, 2018
Why the US-China trade war may not have much impact on Apple – July 17, 2018
Apple launches $300 million China Clean Energy Fund – July 13, 2018
What trade war? Markets shrug off US-China dueling tariffs – July 6, 2018
U.S. President Trump puts tech in trade war crosshairs with planned curb on China investment – June 25, 2018
The Trump administration told Apple it would not place tariffs on iPhones assembled in China – June 19, 2018
Chinese stocks end at 2-year low, Apple suppliers sink on trade-war concerns – June 19, 2018
Why Apple CEO Tim Cook is acting like tech’s top diplomat – June 18, 2018
Apple CEO Tim Cook doesn’t expect a full-blown trade war between the U.S. and China – June 5, 2018
President Trump and Apple CEO Cook meet at White House with trade the focus – April 25, 2018
Apple CEO Cook to meet with President Trump – April 25, 2018
Why Apple stock can withstand a Chinese trade war – April 5, 2018
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
Timmy spoke with the President Trump multiple times before all of this went down. He knew what the plan was and what the effect was going to be but he was playing politics and took a different path. Nows he looks like Balmer’s stupid son…
You look like Gary Busey post-lobotomy.
Your reply was deep and demonstrates your vast life experience and wisdom.
It was brilliant and designed to help you make a fool of yourself. Objective accomplished.
LOL…break time’s over…go back to work.
I’m sooooo tired of winning.
Trumpanzees will spin it to justify America being greater now that The Donald has furloughed the Coast Guard, Homeland Security, etc. How exactly that makes America strong or safe is beyond me. A dumb fence is more important to that village idiot than having a functioning national defense. The best thing that could happen to make America great is for Trumps cronies to give Mueller enough smoking guns to impeach the corrupt POS.
Good thing my fellow service members will be getting ANOTHER pay raise this year thanks to Mr.Trump.
Too bad then that the DoD civilians who support those warfighters got froze out … that hurts recruitment & readiness as well as morale to do their jobs to get the necessary material out to the field, which means that soldiers are put at higher, not lower, risk.
Do please inform us how grand your raise was last year. Congress will decide the budget and since Trump is too stupid and belligerent to sign it, there isn’t anything but IOU’s to give federal employees for the foreseeable future. Sorry.
Whiners who hated the steady 2-4% growth Obama delivered decided to elect a 7 times bankrupt populist liar xenophobe with zero economic abilities or military experience. The revolving door white house first lined the pockets of their corporate donors, then called it a day … for the whole last year doing nothing. Worse, loose cannon Trump’s self defeating trade stance has promptly strangled the economy. The corrupt rethug swamp has nothing but shoo-in misogynist judges to show for it.
The tweeter in chief has no strategy (he never did define how to measure greatness, apparently he is proud of debt). So why imagine the idiot will get the US economy on track? He listens to no one; no independent advisor with real experience or a legitimate college degree lasts more than 18 months. Don’t you be surprised when the rest of his campaign promises go unkept. Watch as he directs US military focus on parades or to lock up innocent kids to suffer ( or die) in tents on the southern border. Watch in amazement as Trump balloons the deficit bigger than his predecessor when it was Trump who inherited a growing economy and Obama who defeated the greatest economic mess in 2 generations.
In addition to squeezing trade, buffoon president trump just laid off almost 0.5% of the US workforce — critical federal personnel that enable private employers to function— so it’s not just Apple that is going down. All companies and exporting farmers are getting slaughtered. Are these economic disasters Trump ushers in now worth it? All so he can demand US taxpayers fund an ineffective medieval defense barrier that he claimed repeatedly would be paid for by Mexico. Trumpanzees must be proud to cut off their own noses. The Great Wall didn’t protect China, an imitation one today won’t save the USA from global competition.
It’s unfortunate that Cook will be a poster child victim of Trump’s easy to lose trade wars but the saddest part of this is that there are still people who listen to Trump, who has been proven to outright lie or intentionally mislead the public at least 15 times per day on average.
Modern Rome continues to swirl the drain as debts mount and a whiny, undereducated, poor health, entitled, overdrugged, low empathy populace bickers amongst itself. Hope you diversified your investments otherwise your next raise will merely attempt to fill the massive hole in retirement savings that Trump is burning before your eyes.
Are you going to buy a Porsche with your raise or super size your next order of fries at McDonalds?
What’s a pay rise when a president does everything to crash the dollar’s value?
No country can survive acting constantly carelessly for the rest of the world.
Dopey Donald upsets the apple cart of world trade, bullying friend and foe, and thinks he’s winning if he can steal a few apples in the confusion. Wall Street has been giving Trump the benefit of the doubt, thinking he can’t possibly be this stupid and that he will pull a rabbit out of his hat, but the evidence is mounting the big crash is yet to come.
On the bright side, in 2020 when a new competent executive is elected, you’ll see progress toward global fair trade and the markets will be significantly more stable. That person can’t help but be more mentally stable. Today the POTUS displays all kinds of psychological deficiencies.
Several professionals have accurately diagnosed Trump with Narcissistic Personality Disorder: http://www.psi.uba.ar/academica/carrerasdegrado/psicologia/sitios_catedras/practicas_profesionales/820_clinica_tr_personalidad_psicosis/material/dsm.pdf .
But there is so much more that is preventing the current idiot in chief from being a leader or accomplishing any meaningful advances for the vast majority of US citizens:
1) paranoia (look at his anti-immigration stance)
2) delusion (everything he mentions is the biggest ever, unable to connect his narrative to verifiable facts)
3) hubris (he thinks America’s power is unlimited, advocates violence, but refuses to listen to intelligence reports or military status)
4) malignant narcissism (look at the qualifications of his closest advisors: blood ties)
5) defensiveness (if you can’t counter a question without a personal attack, you are obviously out of your mental league)
6) conspiratorial fantasies (too many to count, including birtherism, fraud in the election which put him in office, etc)
7) fascist tendencies (constant desire to use unilateral power despite laws requiring transparent procedures, checks & balances, or public reviews)
8) scapegoating (no president ever blamed so many)
9) volatile temper tantrums (witness the degrading, the attacks, the fearmongering, all without factual basis, when the petulant Orange One doesn’t get his way)
10) lack of empathy (completely unable to identify the needs of others)
11) endlessly exploitative (will employ people only until that person is a no more personal enrichment or entertainment to him)
12) Unpredicatable (like addressing Native American veterans in front of a portrait of Andrew Jackson)
13) Bottomless egotism (why else would one tweet his need for adoration 24 hours a day, while whining about the free press that amplifies the reach of his missiles?)
Bottom line, China has all the leverage and they know they will never achieve a meaningful trade agreement with the current mentally unstable idiot pretending to run the USA from his golf course.
The comments on MDN today seem dominated by people with poor understanding of AAPL or freshman macroeconomics or both. It is illogical to praise Trump’s trade war with China as a brilliant move by a master negotiator, while blaming Apple’s management for what we now know to be the consequences of Trump’s trade brinksmanship. Reduced buying power by Chinese consumers and reduced appetite for US goods by patriotic Chinese. If you are a proud trade warrior and believe the adverse consequences on your portfolio are a price well worth paying, then that’s your opinion and you now have the consequences you should have expected. You should own that.proudly. What seems completely clueless to me are the comments blaming “Pipeline Timmy” for the predictable effects of trade-barrier brinksmanship. If you doubt that Trump’s trade war is the cause of the Apple earnings miss, then just re-read the words of Trump’s own spokesman in the article above.
Every single CEO on planet Earth knew in mid-2016 that a President Trump would go to war with China. These corporate leaders had two years to prepare and did NOTHING. In that time, they could of fast-tracked new products, moved manufacturing to other countries, purchased high-growth companies, but they did NOTHING, except listen to Wall Street idiots who championed mediocre innovation, higher ASPs and buybacks of inflated stock.
Amen…it’s as obvious as the nose on your face.
Incredibly ignorant of you. The first sentence of the original post captured your grasp of economics and finance perfectly.
That being the case, why are Wall Street, world financial markets, banks and every official outside of T rump’s “very large brain”… flailing without a clue? Why would these all knowing CEOs put their investors, profits, positions and companies in jeopardy for no reason?
The Morons Against Greatness in America must also then have known the Liar in Chief’s intentions, which then makes you, him and anybody else who supports the current WH strategy….the true ‘Enemies of the People’
To hell with YOUR “president Trump” and his so-called advisors! We’re all going to Hell after the damage they’ve unearthed and inflicted.
Bring back the headphone jack and all will be well with the world.
Headphone jack! Hell, I won’t be happy until I get a floppy drive back!
MDN take: so now Apple, the company and brand that you owe your existence to – is now acceptable collateral damage to your political leanings.
Stuff you! you’re all effing mad.
With Trump’s isolationist policy, the degradation of the American economy was completely predictable.