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Apple Expert: No Material Impact From Tariffs On iPhone Maker

Apple Expert: No Material Impact From Tariffs On iPhone Maker

Tech behemoth Apple Inc. (NASDAQ: AAPL) acknowledged to American trade officials that President Donald Trump's tariffs against China will impact its business. While the company didn't offer any specific financial projections, notable tech and Apple expert Gene Munster said the financial impact is likely to be a less than 1-percent hit to fiscal 2019 profits.

What Happened

Apple said new and upcoming tariffs against China will impact its Watch, AirPods, Beats and other smaller product lines, Munster said in a Monday blog post.

While the company doesn't break down details of each business segment, it is likely the group of product lines will account for 4 percent of fiscal 2018 revenue and 5 percent of total companywide sales next year, Munster said. 

Based on the assumption of 5 percent of total sales, it is likely the financial impact to Apple from tariffs will be less than 1 percent of fiscal 2019 profits, according to Loup Ventures. Munster predicts the impact will be short-lived, as the tariffs will likely "go away" after two years.

Why It's Important

Any perceptions of a difficult relationship between Apple and the Trump administration are likely untrue, Munster said. Despite Trump's pressure on China, the iPhone maker remains very much "remains in good standing" with the government and is committed to investing $350 billion in the U.S. over the coming years, he said. 

What's Next

Apple could in theory increase its domestic production over the next five to 10 years, but it is unlikely to exceed 10 percent of companywide production, Munster said. 

Related Links:

Morgan Stanley Raises Apple's Price Target On Video Optimism

Canaccord Raises Apple Price Target Ahead Of iPhone Event

Photo courtesy of Apple. 

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Jan 2021Morgan StanleyMaintainsOverweight
Jan 2021BarclaysMaintainsEqual-Weight
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