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Apple CEO Tim Cook revealed some much-anticipated details about the impact of President Donald Trump’s trade war on his company, describing a relatively modest increase in costs this quarter. But his response didn’t entirely satisfy Wall Street, which was anxious for a big-picture assessment of Apple's exposure to the tariffs.
In an earnings call on Thursday, Cook said the new tax on imported supplies would cost Apple an extra $900 million in the June quarter, assuming no further changes in tariffs, after only a “limited impact” in the March quarter. Asked by analysts to predict the longer term cost of the tariffs, Cook deflected from giving any specific numbers, saying the situation was fluid, but hinted that the price tag could rise.
“We will manage the company as we already have—with thoughtful deliberate decisions,” Cook said.
Apple’s shares fell 4% in after-hours trading to $204.94.
Apple, the world's most valuable company, is among the many corporate giants scrambling to adapt their business operations to weather the barrage of tariffs unleashed by Trump. Earlier on Thursday, General Motors told investors it expected to take a $4 billion to $5 billion hit this year as a result of the automobile tariffs imposed by Trump.
Trump sent shockwaves across corporate America on April 2, when he said he would impose a steep tax on products imported from abroad, including a 145% levy on goods from China. Apple risked being particularly impacted because a big chunk of its production is in China.
In the aftermath, investors, worried by the potentially devastating impact of the tariffs on Apple, sent its shares tumbling. In just a few days, the company’s stock fell 20%, erasing hundreds of billions of dollars in market value, before recovering more recently.
A week later, as financial markets verged on chaos, Trump gave tech companies including Apple at least a temporary reprieve by exempting smartphones and other electronics from his tariff plans. But the industry still faces huge uncertainty about the future as the White House mulls a separate tax on imported tech products.
During Thursday’s call, Cook laid out some of the maneuvering Apple has undertaken to minimize the impact of the China tariffs as much as possible. The strategy has included shifting the countries from which Apple imports its all-important iPhone into the U.S. along with other devices.
Most of those iPhones in the current quarter will come from India, where Apple has scrambled in recent years to increase its manufacturing and where tariffs are lower than in China. “Nearly all” other products imported into the U.S., he said, such as Mac computers and iPads, will be sourced from Vietnam, where tariffs are also lower.