Tariff Quote Watch: Apple’s Crunch Shouldn’t Be a Surprise

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Smartphone and computer manufacturer Apple has cut its revenue guidance for the most recent fiscal quarter by between 5.6% and 9.6% to $84 billion. The firm’s CEO, Tim Cook, has cited the “magnitude of the economic deceleration” in China which has been caused – again in part – by “rising trade tensions with the United States” as a major driver for the slowdown.

That there has been a trade dispute-inspired slowdown in China’s trade activity is hardly new news. Official data – first discussed in Panjiva research of Dec. 10 – show’s China’s bilateral trade with the U.S. grew by just 1.0% in November compared to 10.3% in the prior three months. That included a drop in export growth to 9.8% from 13.5% in the prior three months while imports suffered a more extreme 25.0% drop from zero growth previlous.

The latter has largely been the result of reduced commodity imports from China. A recovery is possible given recent government actions to cut import duties broadly and improve commodity purchases from the U.S.


Chart shows China’s bilateral trade with the United States. Calculations based on China General Customs Administration data.   Source: Panjiva

In the meantime Chinese exports of mobile phones – including those shipped by Apple’s suppliers – fell 8.2% on a year earlier in the three months to Nov. 30. That was offset in dollar terms though by a marked increase in average values per handset so that value of exports actually climbed by 20.8% over the same period. The smartphone industry’s continued success therefore likely needs further growth in average handset values to offset declining shipments.


Chart shows Chinese exports of mobile phones (HS 8517.12). Data since Jan. 2018 based on China General Customs Administration data.   Source: Panjiva

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