From “Clear Headed Thinking Amidst Tariff Confusion,” a note to Loup Ventures subscribers that landed on my desktop Wednesday:
In the case of Apple… we do have 3 indications that the company is at little risk. First, US policymakers aim to protect US companies, and Apple is the most successful US company in China. Second, Apple has historically avoided tariffs. Third, it is unlikely that China would impose import tariffs on US goods manufactured in China as that would discourage US companies from manufacturing there. Keep in mind, Apple indirectly employs about 1m Chinese workers to assemble its products.
That said, we view Apple’s biggest risk coming from Chinese consumers boycotting Apple products to damage what is a symbol of US success in China. In the Dec-18 quarter, there were calls on China social media to boycott Apple products due to growing trade disputes with the US along with the arrest of Huawei CFO Sabrina Man in Canada (which triggered a boycott of Canada Goose Holdings). This may have played a role in China iPhone units declining 40% y/y in Dec-18 after being up nearly 20% yy in Sep-18 (Loup estimates).
My take: Ay, that’s the rub!