Thought Leadership
Apple has lost the title of the most valuable company on the stock market because investors fear the consequences for the iPhone company of the China tariffs imposed by President Donald Trump.
Apple shares have lost more than a fifth of their value in recent days. Microsoft became the number one on the stock market on Tuesday with a market value of around 2.64 trillion dollars (2.4 trillion euros). Apple followed with just under 2.6 trillion dollars.
Most iPhones are produced in China. If all of the Trump administration’s tariff measures are added together, imports from the People’s Republic into the US will be subject to a 104 percent tariff from Wednesday. Apple now wants to deliver iPhones from India to the USA first, while CEO Tim Cook is trying to obtain an exemption from the tariffs, wrote the Wall Street Journal. The situation is still too unclear to turn around long-term investments in the supply chains, it said, citing informed persons. Trump imposed a 27 percent tariff on goods from India.
Americans should “turn tiny screws”
Meanwhile, the message from the White House is unmistakable: Apple could simply produce the iPhones for the American market in the USA. “Why are they building it all in China? Why don’t they do it here?” asked Trump’s Secretary of Commerce Howard Lutnick weeks ago.
In response to the objection that, among other things, labor is cheaper in China, Lutnick replied at the time: “Now there are robots that can do that.” In the USA, this will create “millions and millions” of jobs – for example for construction workers and mechanics who maintain the robots. Most recently, Lutnick enthused: “The army of millions and millions of human beings turning tiny screws to produce iPhones – something like that will come to America.”
iPhone for 3500 dollars?
Industry experts who are familiar with Apple’s supply chains are quick to dissect such mind games. If Apple were to build its iPhones in a factory in West Virginia or New Jersey, for example, the price of a device would be 3,500 dollars, warned analyst Dan Ives from the investment firm Wedbush. If the company moved only ten percent of the supply chain to the USA, it would cost it three years and 30 billion dollars, Ives estimated on the news channel CNN.
The market expert emphasized that no other company has been so badly affected by Trump’s tariffs. “This could change the future of Apple.” Needham analyst Laura Martin pointed out on CNBC that it had taken Apple around three years to relocate 14 percent of iPhone production to India. Martin also assumes that the company will try to keep prices unchanged for end customers in the USA.
20 years invested in China
According to market expert Craig Moffett from Moffett Nathanson, there is “no good answer” from Apple to the tariffs. The company has invested 15 to 20 years in building its current supply chains – “and that simply cannot be replicated elsewhere”. It is not a question of pouring cement into the ground for a factory in the USA and ordering robots – because the US labor market alone does not provide the necessary skills and numbers, Moffett argued on CNBC.
Trump’s spokeswoman Karoline Leavitt said on Tuesday that the president “absolutely” believes that Apple could produce iPhones in the USA. Trump believes that the USA certainly has the resources and manpower to do so.
dpa
