Donald Trump, the president-elect, has suggested significant tariffs on China, where Apple produces a substantial number of its devices. However, Apple’s stock is reaching unprecedented heights. Here’s an explanation.
How Apple’s international competition acts as a buffer against potential new Trump tariffs
Gene Munster, Managing Partner at Deepwater Asset Management, has released market predictions for 2025.
One of their forecasts relates to Apple (alongside Tesla), giving insights into Wall Street’s perspective on the forthcoming Trump tariffs and their influence on American tech firms.
Deepwater foresees:
Apple and Tesla are likely to receive tariff exemptions (should Trump implement his proposed tariffs on China) – There’s no doubt that higher tariffs are coming for numerous manufacturers, but Apple and Tesla are expected to be shielded from hefty tariffs. Trump likely doesn’t want Tesla to be outpaced by BYD or Apple to fall behind Samsung.
This sentiment aligns with the expectations of other investors and analysts regarding Trump’s upcoming administration.
Even with the strong possibility of expansive new tariffs, Apple appears well-positioned to sidestep any substantial new financial challenges.
Insights from Trump’s first administration on future expectations
In many respects, Trump’s initial term has set precedents for what Apple might encounter in the next four years.
In 2019, President Trump had dinner with Apple’s CEO Tim Cook, where he stated Cook presented a “very compelling argument” for Apple to receive tariff exclusions.
Cook purportedly contended that it would be challenging for Apple to pay tariffs on its products assembled in China, especially since many of its competitors, such as Samsung—primarily manufacturing in South Korea—would not face the same tariff levels.
This rationale underpins Deepwater’s belief that Apple is likely to gain tariff exemptions once more.
While Trump certainly desires Apple to relocate more of its production outside of China, he is also wary of harming a US-based firm facing fierce competition from foreign entities.
With Trump’s inauguration approaching, it’s perhaps not surprising that Cook recently dined with the new US leader again.
What are your thoughts on whether Apple will be affected by the new tariffs? Share your opinions in the comments.
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