UBS: Apple could ‘ultimately mitigate’ President Trump’s proposed tariffs on iPhones, laptops

“New tariffs on consumer products like the iPhone wouldn’t hurt Apple too much, UBS says,” Ethel Jiang reports for Business Insider. “Fears over such tariffs were highlighted Monday when President Donald Trump told The Wall Street Journal that he was prepared to slap tariffs on the rest of Chinese goods not already subject to duties, including some consumer goods such as iPhones and iPads. He also told The Journal it was ‘highly unlikely’ that the US would exit this week’s G20 summit with an agreement to hold off on increasing duties already in place on Chinese goods.”
“The UBS analyst Timothy Arcuri said those threats could simply be a ‘negotiating tactic’ ahead of the G20 summit, when Trump is expected to meet with Chinese President Xi Jinping,” Jiang reports. “He also said that ‘Apple could ultimately mitigate any tariff impacts’ if Trump goes ahead with the plan.”
It is unclear whether the incremental tariffs would be at 10% or 25%, but assuming a 10% rate, we estimate an earnings per share impact of ~$0.33 (~2.5%) on our baseline F2019E EPS of $13.06 assuming implementation in March quarter and assuming Apple would absorb the incremental costs rather than passing them on to consumers. — UBS analyst Timothy Arcuri
Read more in the full article here.
MacDailyNews Take: We’ll see how it shakes out, but we wrote back in August:
The tariffs are not the end game. They are bargaining chips and, due to the trade imbalance, the U.S. has 376 billion more chips with which to play than China ($506B – $130B)… This initial negotiation phase too shall pass. The end result will be better than the starting point.

The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!
— Donald J. Trump (@realDonaldTrump) June 24, 2018

I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018
At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006
SEE ALSO:
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