Maximum uncertainty, says analyst Amit Daryanani, provides maximum flexibility to Trump.
From a note to clients that landed on my desktop Sunday:
ALL YOU NEED TO KNOW: Given increased optimism around US/China discussions after President Trump’s tweet regarding a G20 meeting, we think it’s instructive to consider the timeline and options going forward.
Our China Strategist (Don Straszheim) published a Note detailing his view on the upcoming meeting. Mr. Straszheim expect tariffs (new ones) get placed on an indefinite hold as the nations jointly call for a “time-out” to restart negotiations. This results in maximum uncertainty around tariffs, and to the Markets and others (in China, the US and Rest of World), but provides maximum flexibility to Trump.
We would also note separately that a number of companies have submitted written comments to the USTR providing their perspective on the tariffs and their impact, including AAPL in our coverage (among others, see Note for links to the 2400+ submissions).
Net/net: we think this uncertainty is likely to persist and that it will continue to induce volatility in most IT Hardware names given their China-centric exposure.
AAPL: We have reviewed AAPL’s written documents that were sent to the USTR. Effectively, AAPL stresses that Round 4 tariffs going active would negatively impact AAPL’s contribution to US GDP and negatively impact their global competitiveness (AAPL mentions how the tariffs would tilt the playing field in favor of global competitors). AAPL also highlights that they directly/indirectly provide employment to 2M+ Americans and remain the highest taxpayer to the US treasury. We have estimated that tariffs could negatively impact AAPL’s EPS by 4-8% (under 10% scenario) and 10-20% (under 25% scenario).
My take: I had no idea that Apple’s letter to Robert Lighthizer was one of more than 2,400 submissions. Has anyone told the President?