Commercial war with China: How to meet Apple’s isolation attempts

Apple is one of the major US companies that get a lot from the current trade conflict between the Trump administration and many countries in the world. The iPhone group produces almost all products outside of the United States, most in China. The US government had recently explained a 90-day exception of possible punitive tariffs-probably also on lobbying of Apple boss Tim Cook. However, the planned 145 percent importing customs on products from the People’s Republic could return and the iPhone in the United States strongly. But it does not stay that way: In other areas, too, there is an open conflict between the two countries, as a well-known Apple analyst warns in a new report.

Disrupted supply chain

The reason: In addition to the possible high punitive tariffs against China, Washington tries to isolate Beijing – also with other trading partners. Like the US stock exchange transmitter CNBC writesChina then wants to react with its own retaliation. The Trump government therefore plans to use the current customs negotiations with numerous countries, to make further world regions to reduce their business with China. The Chinese Ministry of Commerce reacted promptly and announced that one would “resist any deal that goes at the expense of Chinese interests”. “Resolute countermeasures” are to be expected.

Loud View of Ming-Chi KuoApple expert at the Taiwanese Investmenthaus TF International Securities, that means nothing good for Apple’s supply chain (and Apple itself): The risks for tariffs and other restrictions could “escalate significantly” and make the situation “highly unpredictable”. Because Apple’s supply chain is significantly dependent on China. The group screws its iPhones together in India (or can do this by finishing), but uses preliminary products and components that mostly come from China. Indirect tariffs from US trading partners could interrupt Apple’s supply chain.

Puncture tariffs against China on the United States Pressure

“As long as the United States only demand high tariffs to Chinese imports, the risks can be managed. If other countries do this, Apple would have to build even more non-chinese iPhone production lines,” said Kuo. In the future, not only US imports-as the largest market for Apple-would be affected, but also other markets, which in turn impose punitive tariffs against China (or components from China) on pressure from the United States.

In the worst case, the customs risk for Apple should not be evaluated “and no longer checked,” writes the analyst. It is currently unclear what exactly is being negotiated behind closed doors.