As the US enters day 443 of the trade war with China, American consumers and businesses are starting to feel the effects of this prolonged dispute. According the New York Times, the average household will see an increase on average of $460 over the course of a year (chart below) as a result of the cost of tariffs being passed on to customers.
Few companies are left out of this seemingly unending trade war. Some of the largest industries are feeling the weight of tariffs. Brick and Mortar retail stores, food and agriculture, and telecom, just to name a few, are expecting to feel the largest impacts of the two largest economies battling it out.
However, there is some light at the end of the tunnel for all those techies out there. According to a recent report by Reuters, the “USTR (a gov’t agency responsible for developing and recommending US trade policy to the president of the United States), has granted 10 out of 15 requests for exemptions filed by Apple…”. This stemming from a letter penned by CEO Tim Apple (see what I did there?) to the Trump administration stating that “… the tariffs “would result in a reduction of Apple’s U.S. economic contribution”. As I am sure Washington weighs the pros and cons of its actions (eye roll), this statement from Tim Cook was just one part of the equation that prompted government action.
The requests were specifically aimed at Apples Mac Pro Professional computers, which have a price tag of $6,000, and are produced in Austin Texas. As a result of keeping the production of these expensive computer in US, the Trump administration moved to shield it from steepened tariffs on Chinese imports.
As a result of this news, investors pushed AAPL stocks higher, before eventually settling back around its opening price. This news has many analysts saying that there is still room for Apple to grow.
Although the valuation for Apple might be on the higher side, I think given the right timing, the particular stock is still a buy. Much will depend on China and the components it provides for Apple and the never-ending antitrust lawsuits regarding Apples alleged treatment of other apps in its app store. If all things stay the same, Apple is still a sound company with a lot of upside potential.
ttps://www.fool.com/investing/2019/09/23/apple-scores-tariff-exemptions-in-exchange-for-dom.aspx
https://news.yahoo.com/apple-manufacture-redesigned-mac-pro-234500249.html
Dry Powder 