Apple is one of the largest technology companies in the world. The stock price of the company has performed strongly in 2019. However, the trade conflict between the United States and China continues to expand. The United States recently increased tariffs on all Chinese imports. In response, China added additional tariffs to American products. Companies that operate manufacturing facilities in China, such as Apple, are stuck in a difficult situation. With rising duties, there is no doubt that manufacturing costs will surge in the coming months.
The trade conflict started in 2017 when President Trump was elected. He promised the American people that he would reduce America’s trade deficit with China. When the first tariffs were announced, few people thought the trade conflict would escalate to what it is today.
Apple started to diversify manufacturing sources when the new duties were announced. As a result, the company has factories in countries outside of China. Both South Korea and Vietnam have large manufacturing industries that technology companies can utilize. The CEO of Apple, Tim Cook, recently announced the company would continue looking for suppliers outside of China.
The stock market has drastically improved in value during 2019. However, the stock market dropped once higher tariffs on Chinese products were announced. Technology companies endured the most significant stock market declines. Apple’s stock price has fallen drastically in the past few weeks. Some investment analysts think the decrease in value is an excellent buying opportunity. Others firmly believe that the stock market will continue dropping for the foreseeable future.
Other Economic Issues
A recent report discussed all of the economic implications of a trade conflict with China. The report estimated that the cost of various electronic devices would drastically increase. The entire technology industry could endure a slowdown if consumers are unwilling to pay more money for basic products. It is vital for technology companies to find ways to reduce the cost of products.