Gene Munster: 'We don't expect tariffs on Apple products'


With everyone wondering whether the price of their Apple (AAPL) products will skyrocket thanks to the ongoing trade war with China, one long-time Apple expert says there is no need for alarm bells.

Loup Ventures Managing Partner Gene Munster says he doesn’t expect tariffs on Apple products despite Wall Street’s widespread speculation that the tech giant will be among the companies hurt by the U.S.-China trade war.

“This is a critical misunderstanding. Ultimately, Apple products really don't have much tariff risk,” Munster said in an interview with Yahoo Finance’s The Final Round. “The reason is that Apple is an iconic U.S. brand that the U.S. government doesn't want to jeopardize. We don't expect tariffs on Apple products.”

Apple has been among the companies caught up in the ongoing trade conflict between the U.S. and China. Shares of Apple jumped after the United States Trade Representative office said on Tuesday that tariffs on select consumer products would be delayed until December 15th. The announcement came just weeks after President Trump unveiled a new round of tariffs on $300 billion of Chinese imports, which sent the stock market, including Apple, tumbling on the news.

China: looming risk or an opportunity for Apple?

But while some analysts may view China as an ongoing risk for Apple, Munster insists that “China is a unique positive for Apple’s long-term growth story.”

“More recently China exposure is viewed as a negative for Apple,” Munster said. “That view is idle speculation and ignores the China opportunity.”

Kyiv, Ukraine - Fabruary 6, 2018: Apple iPad Gold with iPhone 8 plus and MacBook Pro on black wooden background, top view. Apple Inc. is an American multinational corporation that designs, develops, and sells consumer electronics.
Apple products: Apple iPad Gold with iPhone 8 plus and MacBook Pro

Munster points out that Apple’s sales in Greater China for the June quarter accounted for 17% of revenue, up from 13% in the prior quarter.

“Most people were expecting a drop in the China revenues,” Munster said on The Final Round. “So I think that’s an indication of the strength of the Chinese consumer and one of the reasons why Apple stocks performed relatively well over the last month.”

What happens if trade war escalates

While Munster reiterates that it is highly unlikely Apple products will be tariffed by the U.S., should the trade war escalate further the contagion will spread across all American companies.

“If trade war heats up, all companies will be affected, and Apple will be hurt in-line with other U.S. companies - not worse, not better,” Munster said.

Since the start of the trade conflict when President Trump first announced tariffs on solar panels and washing machines back in January of 2018, shares of Apple have gained more than 15%. So far this year Apple is up 28% as of Thursday close.


Iryna Kirby is a Producer for Yahoo Finance. Follow her on Twitter at @IrynaNesko.

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