The US-China trade war has been elevated to a point that is now causing concerns about the future of Apple shares and iPhone sales. Last week, Apple stock dropped 6.9% mainly on the back of the comments by President Donald Trump and his harsh assessment of the trade situation with China – he has allowed the 25% tariff rule to kick in. CEO Tim Cook of Apple is credited with the strong first quarter earnings that will surely be impacted this coming quarter.
The relationship between China and the US has deteriorated somewhat and there is a growing fear that Apple will be one US firm that does suffer. The $200 billion dollars of goods that will see increased tariffs to 25% was the driving force behind the 5-day breakdown of Apple stock by 6.9%. The massive exposure and reliance of Apple on China is the crux of this problem and US investment banks, their analysts that is, have been talking about the negative impact. The company lowered its 2019 revenue outlook to $84 billion, with the rationale for lowering in lower sales in Greater China.
Despite recent labor costs moving higher, Apple will not be moving manufacturing out of China anytime soon. However, sales in China for Apple were down 20% versus the same period last year. The iPhone sales make up 16.6% of total revenue as these iPhones are popular in China.