“Investors were running from stocks Friday, and particularly those most exposed to increased tariffs on China. Apple was no exception,” Jacob Sonenshine writes for TheStreet. “But fears that Apple’s revenue will get hit hard from Donald Trump’s policy may be overdone for now.”
“‘The impact from tariffs placed on roughly $150 billion worth of goods exported from China to the U.S. to-date has been minimal, so an increase in the tariff rate on the $200 billion worth of goods that are currently taxed at 10% [and now officially at 25%] likely would still be minimal,’ Morgan Stanley analyst Katy Huberty wrote in a note, just before the announcement early Friday of increased tariffs,” Sonenshine writes. “Apple, which often finishes its manufacturing process in China and then exports into the U.S., has just over 33% of its cost-of-goods-sold in China, Huberty estimated. It hasn’t hurt Apple much, so far. ‘However, a 25% tax on the remaining $267 billion of goods exported from China to the U.S. would have considerable ramifications across Apple’s supply chain,’ Huberty said.”
Sonenshine writes, “She thinks Apple would simply absorb the added cost, which would still shave roughly 23%, or $3, off her 2020 earnings per share estimate of $12.67.”
Read more in the full article here.
MacDailyNews Take: Again, this recent ratcheting up of pressure will hopefully propel both sides toward a deal that works for both sooner than later.
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