The statement from Apple CEO Tim Cook, issued just after the New Year, was chilling for stock market investors. “We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well.”
Largely as a result of that, Cook said, Apple would not reach its previous forecasts for sales and profits in the current quarter. Apple’s stock promptly tanked, as did the broader market.
To what extent trade tensions
affect Apple’s results is hard to quantify. A slowing Chinese economy also contributes, as does the diminishing appeal of Apple’s pricey phones in a market where cheaper domestic competitors have improved their products. Apple, however, is a flagship American brand with big stores in heavily trafficked areas of China’s largest cities; to the government and its citizens, Apple making its iPhones in China, rather than shipping them from the U.S., is of no consequence. But given the tensions between Beijing and Washington, which are at their worst level since the early ’70s, before China reopened relations with the U.S., “Apple’s got a big, fat target on its back,” says John Rutledge, who sits on the board of directors of seven different companies doing business in China.
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