Apple Likely Biggest Loser in China – U.S. Trade War
Many market analysts are giving out warning signals to investors regarding the negative repercussions of the bitter trade war between China and the United States. One company in particular, tech giant Apple, is deemed by many market analysts as potentially the biggest loser in this trade war which many believe could last for years.
As trade tensions between China and the United States continue to grow, companies that rely on the two superpowers as major trade partners are also experiencing negative effects of the trade war. On Oct. 29, the United States Department of Commerce announced that American companies will no longer be allowed to sell technologies and components to Fujian Jinhau Circuit Corporation, a major Chinese company in the semiconductor market. The United States is also accusing China of stealing technologies from major American companies.
For several decades, China have committed to the idea of globalization. As such the country's economy have received a major boost by manufacturing and supplying components for various international brands, and in particular American companies.
Apple is one of the largest companies that rely on China for manufacturing services and components supply. China is also one of Apple's most profitable market with a reported $9.5 billion in sales during the June quarter. Most importantly, Apple relies on China, and the whole Asian region, for its entire supply chain.
With the growing threat of the trade war, Apple is now facing major supply crises as the United States impose trade sanctions towards a handful of Chinese companies that are known a supplier of Apple. China, on the other hand, has also imposed its own set of tariffs against various American goods.
Apple Chief Executive Officer Tim Cook said that United States President Donald Trump assured him that no tariffs will be applied to Apple product. Mr. Cook also has an outstanding relationship with Chinese President Xi Jinping. He is also one of the American and Chinese business leaders that attended a lecture given by President Xi about market reforms and innovations.
Many market analysts have warned that Apple might consider extreme measures should the trade war continue to persist. It is viewed that Apple might be a collateral damage as two of the world's biggest economies vie to be on the top by disrupting each other's economy.
Regardless of the trade war threat, Apple stock is still up by 30 percent this year. The company's market capitalization is still well beyond $1 trillion.