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Apple (AAPL) is in focus as a tech company heavily impacted by President Trump's tariffs on imports from China. CFRA Research senior equity analyst Angelo Zino joins Market Domination Overtime to discuss the iPhone maker's position.
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Angel, do you think Apple could ultimately secure a special tariff exemption? A special tariff carve-out like they did during Trump 1.0?
Yeah, I mean, so we've increased the odds, right, to 50% from 20% and, you know, we really changed and increased our probability based on Wednesday's events. When you think about Wednesday, uh, basically the US administration reduced or eliminated or postponed the reciprocal tariffs, um, and essentially has a flat 10% rate here, um, outside of the, uh, outside of China, whereas they actually increased the China rate up to now, what, 145%, which really actually does, you know, makes no sense for Apple to even touch that capacity there. So when you start thinking about, um, you know, the situation that that is evolved there, it changes the competitive landscape in many respects because right now you've got a company like Samsung, which is their biggest competitor out there, most of their operations and capacity is in, uh, Vietnam, uh, India as well as South Korea. So in many respects, they've got a competitive advantage, especially as you start entering the holiday selling season here from, um, from a potential pricing perspective, um, and cost perspective relative to that of Apple. So it'll be interesting to kind of see how the the dynamics, you know, kind of change here over the next couple of weeks and months. But if you're talking about a company in the in an Apple, which is essentially, you know, the crown jewel for the US, and they're they're committing $500 billion into the US economy, helping to prop up kind of the the manufacturing capacity here in the US, a lot of it through funding across the supply chain to the likes of Taiwan semi so they can build their plants here, you almost have to think that you at some point in time, you're going to have to give Apple an exemption. But that's just our view.
So bottom line, you think Apple has a good argument for that exemption, whether or not the White House buys that argument, I guess, is another thing.
Yeah, no, absolutely. And again, we think when you start thinking about kind of the the added stress that's essentially put onto Apple kind of post Wednesday's events now kind of, you know, having a disadvantage from a competitive landscape, we just think it makes more sense to or increasing sense to to offer them that, um, you know, that exemption.
Angel, do you think domestic iPhone manufacturing, US iPhone manufacturing, is that financially tenable?
Yeah, that's tough. I mean, any type of manufacturing for any any goods on the on the chip manufacturing side of things and the hardware side of things as far as the tech ecosystem is concerned is very difficult. We all know about the the slip up with uh with Foxconn and them trying to build a $10 billion plant in Wisconsin back in 2017 and how that never came to fruition. You know, clearly, we've seen some like the likes of Taiwan semi find some success here. So we think kind of we think Apple can move some supply chain manufacturing or push some of that here into the US in terms of, you know, getting some of the the other suppliers out there to to build bases here. But overall in terms of the assembly testing, um, you know, putting together, uh, building facilities as far as iPhones is concerned, it's just it's just a stretch to us. I mean, from a cost perspective, it does not make any sense.