Tension over Trump's tariff tweet torpedoes $30B of Apple market cap

Posted:
in AAPL Investors
After President Donald Trump used Twitter to threaten a dramatic escalation of America's trade war with China, stocks tumbled in early trading. Apple was hit particularly hard, with shares dropping by more than 3%.




President Trump's tweet was enough to take more than $30 billion off the company's market capitalization, less than a week after better than expected earnings drove an over $10 per share climb.

For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars....

-- Donald J. Trump (@realDonaldTrump)


"The president is, I think, issuing a warning here, that, you know, we bent over backwards earlier, we suspended the 25% tariff to 10 and then we've left it there. That may not be forever if the talks don't work out," White House economic adviser Larry Kudlow stated to the BBC.

The BBC cited Asia director Michael Hirson of Eurasia Group as saying that Trump's "move injects major uncertainty into negotiations, which now face a rising risk of an extended impasse - perhaps even through the US presidential election."

The tariffs Trump threatened to hike are assessed on the importing companies, and boil down to a tax that American buyers will pay on goods from China as the price of goods increase. In October, the Trump administration announced $200 billion of tariffs and China countered with $60 billion in tariffs of its own. Apple products were omitted from the original U.S. order, perhaps a consideration of the many letters of concern the administration received from Apple and other tech companies.

Reports last summer claimed the Trump administration promised Apple CEO Tim Cook that iPhone would not be included in the Chinese trade war, but reports have gone back-and-forth on this topic. Apple Watch escaped getting hit by tariffs in September.

While the Tweet doesn't specifically convey whether the tax hike would include any Apple products, the prospect of an endless trade war and the uncertainties raised is likely to have a destabilizing impact on the global economy. Beyond just buying power, Apple's first quarter results were hit hard by economic uncertainty in China, with a carry-on effect impacting Apple's sales domestically.
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Comments

  • Reply 1 of 68
    k2kwk2kw Posts: 1,809member
    The economy is great.   Now's the time for a Trade War.    It's obvious China isn't helping with  North Korea.   Time for Tariffs on FoxxConn made iPhones.   They will regret not building the factory in Wisconsin.
    SpamSandwichsdw2001spock1234jbdragon6502
  • Reply 2 of 68
    lowkenlowken Posts: 1member
    Trump is brilliant. China is trying to delay and Trump just turns the screws.
    SpamSandwichspock1234jbdragonbigtds6502
  • Reply 3 of 68
    How much has 'brilliant' Trump's strategy cost the US and its citizens so far? How much money will the government invest to fight this Trade War? Just intrigued because on this side of the pond we have some Trump fans who are busy pushing a crash-out Brexit so that we can do trade deals with him.
    GeorgeBMacbaconstangdavendysamoriatyler82Carnage
  • Reply 4 of 68
    avon b7avon b7 Posts: 4,219member
    They might try and drag things out and see how the elections go, applying tit-for-tat tariffs in the meantime.

    I think China isn't the only country that would rather deal with a different negotiating style and new political representatives.

    In my talks with people in the corridors of certain agencies in Europe, the feeling is that they've had enough.
    edited May 6 mac_dogCarnage
  • Reply 5 of 68
    GeorgeBMacGeorgeBMac Posts: 5,158member
    China plays the long game.
    Trump plays the bluster game.

    My money is on China.
    macplusplusspice-boymuthuk_vanalingamcharlesatlaslordjohnwhorfinlongfangdysamoriatyler82n2itivguy
  • Reply 6 of 68
    lkrupplkrupp Posts: 7,321member
    China plays the long game.
    Trump plays the bluster game.

    My money is on China.
    Interesting that some would celebrate the U.S. capitulation to a totalitarian communist regime. Everything is made in China now. How much more can the West give up? How about Ford, GM, and Chrysler move assembly to China too? And Renault, BMW, Mercedes too? 
    jbdragonbigtdsgatorguy
  • Reply 7 of 68
    avon b7avon b7 Posts: 4,219member
    lkrupp said:
    China plays the long game.
    Trump plays the bluster game.

    My money is on China.
    Interesting that some would celebrate the U.S. capitulation to a totalitarian communist regime. Everything is made in China now. How much more can the West give up? How about Ford, GM, and Chrysler move assembly to China too? And Renault, BMW, Mercedes too? 
    Everything isn't made in China. I see lots of stuff coming out of Indonesia, Malaysia, Vietnam and Turkey.
    n2itivguyGeorgeBMac
  • Reply 8 of 68
    lkrupplkrupp Posts: 7,321member

    How much has 'brilliant' Trump's strategy cost the US and its citizens so far? How much money will the government invest to fight this Trade War? Just intrigued because on this side of the pond we have some Trump fans who are busy pushing a crash-out Brexit so that we can do trade deals with him.

    As one of the citizens of the U.S. you mention I am willing to take some hits if it means we get a better trade deal instead of the lopsided one we have now where China exports everything to us and we export nothing to them. Whatever they actually need from us, like technology and IP, they steal. 
    edited May 6 JanNLspock1234jbdragonbigtdsgatorguy
  • Reply 9 of 68
    spice-boyspice-boy Posts: 980member
    lkrupp said:
    China plays the long game.
    Trump plays the bluster game.

    My money is on China.
    Interesting that some would celebrate the U.S. capitulation to a totalitarian communist regime. Everything is made in China now. How much more can the West give up? How about Ford, GM, and Chrysler move assembly to China too? And Renault, BMW, Mercedes too? 
    China did not steal our jobs or factories it was the never-ending thirst of more profits by American manufacturing companies who packed up and left the USA for the cheapest labor in the world to a country with a government without any concerns for environmental protections or workers health. Why did this happen? Bottom line for big companies like Apple.

    We have in #45 a person who is motivated by greed and revenge along with some other major human flaws. We all have gotten super comfy with zero inflation these past 10 years, low and stagnant wages and to keep the US population pacified, cheap, cheap consumer goods.  This is more show-biz to entertain the reality tv fanbase and to distract us from what we are all losing, healthcare, the right to a decent public school education, protected national parks from strip mining, and the further oppression of the population which is really oppressed not those that look like #45
    correctionsmac_doglordjohnwhorfin13485longfangdysamoriatyler82n2itivguygilly33GeorgeBMac
  • Reply 10 of 68
    SpamSandwichSpamSandwich Posts: 31,417member
    China should’ve been kicked out of the World Trade Organization years ago for their product dumping, trademark infringements, mandatory technology transfer, and so much more. They are thieves at every level.

    Also, stories commenting on tweets and their effect on markets may not be the best use of everyone’s time. Markets go up and down all the time. Will there be follow up if the market bounces back after traders realize China will be affected more than the US due to the massive imbalance of trade?
    edited May 6 spock1234jbdragon
  • Reply 11 of 68
    sdw2001sdw2001 Posts: 17,062member
    spice-boy said:
    lkrupp said:
    China plays the long game.
    Trump plays the bluster game.

    My money is on China.
    Interesting that some would celebrate the U.S. capitulation to a totalitarian communist regime. Everything is made in China now. How much more can the West give up? How about Ford, GM, and Chrysler move assembly to China too? And Renault, BMW, Mercedes too? 
    China did not steal our jobs or factories it was the never-ending thirst of more profits by American manufacturing companies who packed up and left the USA for the cheapest labor in the world to a country with a government without any concerns for environmental protections or workers health. Why did this happen? Bottom line for big companies like Apple.

    We have in #45 a person who is motivated by greed and revenge along with some other major human flaws. We all have gotten super comfy with zero inflation these past 10 years, low and stagnant wages and to keep the US population pacified, cheap, cheap consumer goods.  This is more show-biz to entertain the reality tv fanbase and to distract us from what we are all losing, healthcare, the right to a decent public school education, protected national parks from strip mining, and the further oppression of the population which is really oppressed not those that look like #45

    I don't think there is really a factual basis for claiming Trump's tariffs are motivated by "greed and revenge along with some other major human flaws."  I think you can certainly disagree with him on tariffs, but his motivation is clearly that he thinks it turns the screws on China to do more of what we want them to do.  His position is they have been ripping us off in may ways for decades, and he's not wrong.  Tariffs are a close call for me.  In general, I don't support them.  China is a different beast though.  Their highly planned and controlled economy makes things different, as does their assault on our labor market, cybersecurity and forced tech transfers.  So-called "free trade" as embraced by basically both major parties over the last 30 years has clearly had major downsides.  First, it's not "free" in any respect.  We simply calculated that their market and their manufacturing was worth being charged tariffs and non-tariff barriers while we gave them a pass.  Clearly, Trump doesn't believe that.  I think there is evidence to suggest his approach, however unorthodox, is working.  He's not in love with tariffs for tariffs sake, I don't think.  He's clearly using them as leverage, something that is likely to be effective given our trade deficit (they need us for their products, badly).   
    spock1234jbdragonbigtdsSpamSandwichJaphey
  • Reply 12 of 68
    gmgravytraingmgravytrain Posts: 782member
    Out of all the major tech companies, it's always Apple that's going to take the biggest share dive when something goes afoul of the world economy.  Apple always seems to be the most exposed and most volatile major tech company despite decent buybacks, reserve cash, and dividends.  I guess I should be used to it by now.  With Apple's iPhone business failing as badly as it is, it's practically expected.  I'm just grateful for Apple's dividends because those dividends may be the only thing Apple has that will hold its value while the overall company value goes down.  Of course, Apple doesn't care as it's easier for them to buy back more shares each time the stock value drops.  I continue hearing that's a good thing although, to me, it just shows how much weakness the stock has from being artificially inflated.  It's definitely possible Apple stock with a P/E of 16 or 17 is actually too high and why all the major tech companies are able to carry much higher P/Es in the 20+ range.  So much for those who claim Apple will someday have a share price of $250 to $300 a share.  A day like today shows why that will never happen.  If even the slightest thing goes wrong with our economy, Apple's value will quickly fall as big investors dump Apple stock and buy stock from companies that will definitely hold their value, no matter what.  That just makes good investment sense.

    Microsoft has already left Apple in the dust in terms of market cap value and Amazon will be next to show Apple is no longer capable of holding the market cap crown.  Maybe this shouldn't matter to loyal shareholders, but it seems Apple simply hasn't been able to use all that reserve cash properly to bolster the company's value.  I'm just pointing out the glaring holes in Apple's armor, but that won't cause me to dump my Apple stock as those dividends are still worthwhile even at a relatively low yield.
    edited May 6
  • Reply 13 of 68
    AppleishAppleish Posts: 148member
    China will run the world by 2050 and there is nothing anyone can do to stop them.
  • Reply 14 of 68
    65026502 Posts: 277member
    Appleish said:
    China will run the world by 2050 and there is nothing anyone can do to stop them.
    People said the same about Japan in the 80s, now they are nothing. China can succeed only by having massive trade imbalances, once the world wakes up and this ends, so does china's hegemony.
    SpamSandwichgilly33
  • Reply 15 of 68
    65026502 Posts: 277member

    China plays the long game.
    Trump plays the bluster game.

    My money is on China.
    True American patriot here. Evil foreign country over a president he doesn't like.
    bigtdsSpamSandwich
  • Reply 16 of 68
    65026502 Posts: 277member

    China should’ve been kicked out of the World Trade Organization years ago for their product dumping, trademark infringements, mandatory technology transfer, and so much more. They are thieves at every level.

    Also, stories commenting on tweets and their effect on markets may not be the best use of everyone’s time. Markets go up and down all the time. Will there be follow up if the market bounces back after traders realize China will be affected more than the US due to the massive imbalance of trade?
    Correct. China is still treated as a developing country at the WTO and given special treatment similar to a country like Papua New Guinea, meanwhile they have the 2nd largest economy in the world.
    SpamSandwich
  • Reply 17 of 68
    65026502 Posts: 277member

    How much has 'brilliant' Trump's strategy cost the US and its citizens so far? How much money will the government invest to fight this Trade War? Just intrigued because on this side of the pond we have some Trump fans who are busy pushing a crash-out Brexit so that we can do trade deals with him.
    It hasn't cost us anything, my life hasn't changed one bit. Meanwhile the systematic export of the means of production of most of our economy to China has cost us immensely. 
    SpamSandwichsdw2001
  • Reply 18 of 68
    spice-boyspice-boy Posts: 980member
    sdw2001 said:
    spice-boy said:
    lkrupp said:
    China plays the long game.
    Trump plays the bluster game.

    My money is on China.
    Interesting that some would celebrate the U.S. capitulation to a totalitarian communist regime. Everything is made in China now. How much more can the West give up? How about Ford, GM, and Chrysler move assembly to China too? And Renault, BMW, Mercedes too? 
    China did not steal our jobs or factories it was the never-ending thirst of more profits by American manufacturing companies who packed up and left the USA for the cheapest labor in the world to a country with a government without any concerns for environmental protections or workers health. Why did this happen? Bottom line for big companies like Apple.

    We have in #45 a person who is motivated by greed and revenge along with some other major human flaws. We all have gotten super comfy with zero inflation these past 10 years, low and stagnant wages and to keep the US population pacified, cheap, cheap consumer goods.  This is more show-biz to entertain the reality tv fanbase and to distract us from what we are all losing, healthcare, the right to a decent public school education, protected national parks from strip mining, and the further oppression of the population which is really oppressed not those that look like #45

    I think there is evidence to suggest his approach, however unorthodox, is working.  He's not in love with tariffs for tariffs sake, I don't think.  He's clearly using them as leverage, something that is likely to be effective given our trade deficit (they need us for their products, badly).   
    Please explain to me what tariffs are, and why and when they are used and what the goal is ultimately? The global economy is a complex structure and simple to digest "fixes" are useless and possibly dangerous. Look at what is happening in the UK with Brexit, what a mess,  throwing the baby out with the bath water approach is naive. Nuance negotiations will get results not badly thought out, bullied demands. #45 has a history of failed businesses (all documented) but his bluster hides his insecurity and smart people (Putin) can see right through him and will few flattering comments win him over. 
    dysamorian2itivguyGeorgeBMac
  • Reply 19 of 68
    spice-boyspice-boy Posts: 980member

    6502 said:

    China plays the long game.
    Trump plays the bluster game.

    My money is on China.
    True American patriot here. Evil foreign country over a president he doesn't like.
    A true patriot calls out those that break our laws, we are a nation of laws, remember. 
    lordjohnwhorfinmuthuk_vanalingamdysamorian2itivguyGeorgeBMacCarnage
  • Reply 20 of 68
    spice-boyspice-boy Posts: 980member
    Lived in Manhattan for 38 years, I am well aware of the character of #45, I personally know people who have been stiffed by his company. He is considered a "street guy" here, always working a hustle, due to his father's wealth he could run an expensive hustle instead of selling shrink wrapped VHS video cams (which contained a brick) on the sidewalks of Canal Street where most guys like he operated. Trump tower was build with concrete although it was not an engineering necessity. The mob in NY ran two major businesses in the 1980's carting (private commercial trash pickup) and construction concrete. Do you get where I am going with this? NYC was a corrupt place with scammers and hustlers everywhere in the 1980's. It still is corrupt from City Hall down but now the scammers have business degree, dress better and don't sound like they came from a working class neighborhood in Queens. 
    edited May 6 dysamoriatyler82GeorgeBMacCarnage
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