Apple caught in crossfire of escalating China-US trade dispute

By Zhang Hongpei Source:Global Times Published: 2019/5/14 21:03:41

As the China-US trade row escalates among rising tariffs, Apple Corp is getting caught in the crossfire and witnessing its stock price plummet. The US technology giant might be battered heavily in both markets if the trade war extends further, said analysts.

Apple's stock closed down 5.81 percent to $185.72 per share on Monday, following China's announcement on Monday that it decided to raise tariffs to between 5 percent to 25 percent on 5,140 US products, effective June 1.

It was Apple's sharpest decline since 2013, said the UK-based The Guardian on Monday.

The NASDAQ Composite went down by 3.41 percent and the Dow Jones Industrial Average dropped 2.38 percent.

China's latest tariff policy came after the US started raising tariffs to 25 percent on $200 billion worth of China-made goods on May 10.

The Guardian cited a report by Morgan Stanley saying the new US tariffs could add about $160 to the cost of a Chinese-made iPhone XS, which starts at $999, which means US consumers will have to bear the price hike.

The expanding China-US trade dispute will put the US brand at a disadvantage as Chinese consumers are likely to take a wait-and-see attitude toward its products or even boycott it, James Yan, Beijing-based research director at Counterpoint, told the Global Times on Tuesday.

A Chinese netizen named Kuanglongshibaduan said on their Weibo account late Monday that "the US cannot force all the Americans to drop Chinese-made goods, but we can put an end to Apple's iPhone in China."

The political uncertainty, which has persisted since last year, has reportedly pushed the US company to transfer some production to other countries. 

Foxconn, the world's largest electronics contractor and Apple's iPhone maker, said that iPhone would go into mass production in India this year, Bloomberg reported in April.

However, the completeness and maturity of Indian supply chains and production are at least five years behind China, which benefits from years of technological accumulation, Yan said, and this gap will affect Apple's delivery of products. 

For the China market, one of the most important for Apple, the company has also been losing momentum since last year caused by a lack of product innovation and high prices.

"It's been performing weakly so far this year, and now it's getting weaker," said Yan.

"Apple's fifth-generation (5G) product is not yet on the market, lagging behind some domestic smartphone makers, and it is highly likely that such a product won't be released till next year," Yan noted.

"Its photo-taking function is also sub-optimal without the support of new technology," Yan added.

Li, a Beijing-based white-collar worker in the financial services sector, told the Global Times on Tuesday that she has recently changed to Huawei's latest smartphone model P30 after using iPhones, dating back to the iPhone 4 model in 2012.

Being an Apple fan for several years, Li's choice of Huawei was mainly due to the former's bad signal. "I was troubled by poor signals... besides, the new phone's phone-taking ability is surprisingly good," said Li. 

The Apple stock drop on Monday came on the same day that the US Supreme Court ruled against Apple, handing down a decision that a group of iPhone owners who accuse Apple of violating US antitrust rules can sue the company, according to a CNN report.



Posted in: INDUSTRIES,COMPANIES

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