Apple CEO Tim Cook said Wednesday that his company was taking collateral damage in the ongoing trade war between the U.S. and China, blaming poor sales in China for downward revisions to the company’s revenue for the first quarter.
“We believe the economic environment in China has been further impacted by rising trade tensions with the United States,” Cook told investors in a letter, noting that China’s economy lost momentum in the latter half of last year.
“As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed,” Cook said. “And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.”
The company had previously projected that its first quarter revenue for the new year would be between $89 billion and $93 billion. It is now downgrading that to $84 billion.
[Previous coverage: Apple to benefit from exemption in next round of China tariffs: Report]
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook wrote. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
Overall, the Trump administration has hit $250 billion worth of Chinese products with 10 percent tariffs and threatened to raise those to 25 percent if progress is not make in talks with Beijing by March. China has responded with tariffs on $120 billion-worth of U.S. imports.
President Trump said Wednesday during a Cabinet meeting that he was confident he could secure a better deal. “The trade deals we are making are fantastic for our country, whether it is China, Mexico, Canada, [or] South Korea. We started negotiations with Japan,” he said. “They were all one-way streets that were bad for country and good for their countries. We are changing that.”
