Trump economic adviser Kevin Hassett predicted Thursday that other companies would follow Apple in taking collateral damage in the ongoing trade war between the U.S. and China and downgrading their earnings projections.
“It is not going to be just Apple. I think that there are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings being downgraded next year until we get a deal with China,” Hassett, chairman of the White House’s Council of Economic Advisers, said in an appearance on CNN.
Hassett added that the business fallout from the trade dispute “puts a lot of pressure on China to reach a deal,” though he rejected the term “trade war” to describe the conflict.
Apple CEO Tim Cook made a surprise announcement Wednesday that he was revising the company’s expected revenue for the first quarter of this year, citing the ongoing trade war. 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.
“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. Cook said the “climate of mounting uncertainty” was impacting consumers as well as companies, resulting in declining traffic to retail stores and its partners in China.
Hassett argued that the upside to the situation was that China was more likely to cut a deal with the administration to revive its economy. “They have been misbehaving in the global trading community and we’re making great progress to make sure they stop doing that. One of the reasons is frankly their economy is looking, for them, to be in what might be called a recession,” he said.
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 made in talks with Beijing by March. China has responded with tariffs on $120 billion’s worth of U.S. imports.
