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Apple’s tariff-related (and other) challenges are not exactly new.
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The company has managed to deal with these in the past.
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The tech giant looks in a good position to do the same this time around.
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Apple (NASDAQ: AAPL) has undeniably provided life-changing returns to its long-term shareholders. The company’s innovative streak and powerful brand have been key factors behind its performance.
But is the party over for the tech giant? Apple has encountered some headwinds this year, particularly tied to tariffs and President Trump’s trade wars. The stock has suffered, and considering it’s worth $3.5 trillion, some see little upside ahead for the iPhone maker.
However, looking at some precedents, as well as Apple’s own business, can help paint a clearer picture.
Whether it’s due to the potential impact of tariffs or slowing iPhone growth, Apple has seen and overcome obstacles of this kind before.
During Donald Trump’s first presidency, the threat of tariffs was also present, though perhaps not as much as it is now. On Jan. 3, 2019, Apple’s stock dropped by about 10% after the company lowered its guidance because of weak iPhone sales volume in China, partly resulting from Trump’s trade wars. And On Aug. 5, 2019, Apple’s shares fell by 5% after Trump announced tariffs on Chinese-imported goods.
In both cases, Apple was able to rebound with flying colors. The stock has beaten the market following these two significant one-day market losses. Apple was, at the time, able to get around tariffs somewhat by negotiating with the administration to avoid — or at least delay — punitive duties on its imports.
Regarding the slowdown in iPhone sales in China, the company adopted a multipronged strategy that included slightly cutting prices. The result: Apple managed these roadblocks just fine, its financial results remained strong, and it crushed the market, as per its habit, in the years that followed.
The usual caveats regarding applying the past to the future are worth keeping in mind, especially since there are some important differences here. Trump’s tariffs are even more aggressive this time around, for instance. And investors are also worried that the tech leader is falling behind in the artificial intelligence (AI) race.
Even so, one of the most important points to highlight about how Apple has navigated struggles before is that the company is highly adaptable. It announced local manufacturing efforts, amounting to $600 billion over the next four years, in a move to get back on Trump’s good side.
