In retaliation to the Trump administration announcing tariffs on Chinese imports, the country responded with some of its own. Escalation from both sides is creating a lot of jitters in the corporate world, especially for technology companies. When analyzing these, two names in particular jump in mind; particularly due to recent media coverage.
Apple and Tesla are American sweethearts, partially due to their charismatic founders and partially due to similarities in spearheading innovation. So, if you're wondering where both of these stand after recent statements by the Chinese government, we've got you covered. Head on below for the details.
Latest Developments In Impending US-China Trade War Will Not Impact Apple As The Government Is Careful With Language; Tesla, On The Other Hand, Can Face Direct Impacts From Chinese Tariffs
News about a trade war between the United States and China creates a lot of unease for several quarters. China is the largest exporter of goods to the US, with exports from the country to homeland US surpassing the European Union. The Eastern giant's low-cost labor and investment subsidies are a godsend for companies, US and international.
Therefore, several household names are set to suffer if both countries go head to head. The direct impact will harm everyday consumers a lot more than officials sitting in Washington; particularly in the case of American tariffs, which will increase manufacturing costs for several companies.
Two companies, in particular, are mentioned frequently by news outlets when discussing trade tariffs. Apple and Tesla are on the opposite ends of the spectrum when we consider potential after-effects. The former brings manufactured iPhones inside the US. The latter exports its vehicles to China.
The US' list of goods under consideration for tariffs took care to separate end products (or manufactured goods), from intermediary goods (those used to manufacture the former). Thus, the iPhone and other products Apple brings in the US were spared. However, China's retaliatory announcement will impact Tesla far more than the American announcement is set to impact Apple. China's list of 100+ goods subject to future tariffs includes electronic vehicles.
For its latest financial year, Tesla made approximately $11.7 billion in revenues. Out of these, $2 Billion is directly attributable to sales in China. Should the Chinese government decide to implement its latest announcement of tariffs against American exports, Tesla will have to either absorb the proposed 25% hike or pass it on to the end-consumer; neither of which are good options.
Of course, the recent Chinese tariffs are purely in retaliation to US announcements; should the United States abandon its earlier plans, China will not follow through with its plans either. All this, therefore, depends on the amount of lobbying taking place in Washington. Thoughts? Let us know what you think in the comments section below and stay tuned. We'll keep you updated on the latest.