The likelihood is low that Apple Inc. APPL and its iPhones will feel the brunt of the tariffs given its strategic importance in the U.S. market, according to Wedbush.
The Analyst
Daniel Ives maintained an Outperform rating on Apple with a $235 price target.
The Thesis
On May 15, the Trump administration added Huawei to a list of companies that U.S. firms can no longer trade with unless they have a license. The "entity list" bans the company from acquiring technology from U.S. firms without government approval.
While the Huawei ban in the U.S. and its ripple impact have been front and center, the "poster child" for the Sino-American trade wars continues to be Apple, Ives said in a Friday note. (See his track record here.)
Apple is being pressured on "both ends of the spectrum," the analyst said.
The company's Foxconn factory is the "heart and lungs" of Apple's iPhone franchise and employs 1.4 million in the region, and China represents a "growth linchpin" for the company, accounting for 20 percent of all iPhone upgrades over the next 12-18 months, according to Wedbush.
The iPhone is exempt from the latest round of stepped-up tariffs, but if the Trump administration decides to levy a tariff on an additional $325 billion in Chinese goods over the coming weeks and months, it would be more of a potential game-changer, Ives said.
In this case, expenses could escalate by 10-percent-plus over time in a more "draconian" scenario, the analyst said.
Price Action
Apple shares were up 0.53 percent at $180.62 at the time of publication Friday.
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Photo courtesy of Apple.
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