What would happen to Apple’s bottom line if tens of millions of Chinese simply stop using iPhones?
The Chinese government says the tech titan will soon find out if President-elect Donald Trump decides to launch a trade war against the U.S. Through an op-ed in the state-run Global Times, China is sending warning shots at the Trump after his many indications that he will be seeking to implement a 45% tariff on the United States’ chief economic competitor.
What was China’s comeback? No more iPhones.
That’s right, the global superpower is threatening to limit the amount of iPhones sold in China. China is currently Apple’s third-biggest market, earning the company around $12.5 billion last year.
It’s not just iPhones that China is threatening to freeze out of the country. They are also threatening to limit imports of American planes and cars, and instead start buying more from European companies. China is also saying it could limit the number of Chinese students it allows to study in America.
If a trade war were to break out, trade experts believe it is American exports of farm products and American overseas investment (by companies like Apple, GM, etc) that will be the hardest hit.
This is not the first time China has threatened the U.S., and the op-ed references this, stating:
“Not long after Barack Obama took office, US trade and commerce authorities announced a 35 percent import tariff on Chinese tires. In response, China took retaliatory steps of imposing tariffs on US chicken and automotive products. Both China and the US suffered losses as a result. From then on, the Obama administration waged no trade war against China. If Trump imposes a 45 percent tariff on Chinese imports, China-US trade will be paralyzed.
One thing that is important to note is that the President himself does not have the power to implement these kinds of extreme tariffs, and House Speaker Paul Ryan has stated that any type of “trade war” with China or Mexico would be dangerous for the U.S. economy. That has left many people in Washington to conclude that the rhetoric of a trade war with China was nothing more than empty words in a tight election race.