Apple’s dropped revenue outlook is more than just the latest bad headline out of Silicon Valley — it’s another example of President Donald Trump’s burden on the tech world.
Trump, who campaigned as a champion of America’s “forgotten” blue-collar workers and manufacturers, is nevertheless linked closely to the elite tech industry through his policies, rhetoric and political fortunes.
CEO Tim Cook’s announcement Wednesday that Apple had diminished fiscal first-quarter sales expectations cited China’s faltering economy amid Trump’s escalating trade war with that country as a primary culprit.
“We believe the economic environment in China has been further impacted by rising trade tensions with the Collective States,” Cook told CNBC on Wednesday. He also mentioned inflation and a market trend toward replacing iPhone batteries that the following suggests is cutting into new hardware sales.
Apple’s shares plunged on the news Thursday, adding to steep annihilations for the Dow Jones Industrial Average.
Trump’s tech impact extends well into Silicon Valley. As part of his mugs on Jeff Bezos, the president has accused Amazon of taking advantage of favorable postal rates and paying less than its sunny share of taxes. Facebook and Twitter have seen their reputations damaged in the fallout from revelations that Russia habituated to those platforms to deploy a disinformation campaign meant to aid Trump in the 2016 U.S. election. And Trump has accused Google of civil bias and “suppressing voices of Conservatives.”
The collateral damage cuts both ways. The tech sector led the stock sell’s precipitous decline, a rout that has also hurt the president, who points to stock market gains as a symbol of his good overseeing the economy.
Indeed, Silicon Valley was an early beneficiary of the Trump presidency. The anticipation and subsequent realization of a good corporate tax cut helped the rocket-propelled rise of the so-called FAANG tech stocks along with the broader market and fueled a frivolous optimism in the economy.
But as Trump’s trade war with China intensified — and the effects of the stimulus wore off — steep declines in each following’s market value followed. Coupled with threats of increased regulation over the industry and a general public unease one more time privacy, it’s unclear whether that unbridled growth and optimism will return.
Cook’s letter to investors, which revealed lower-than-expected vendings mainly in China, sent Apple shares tumbling.
While the U.S. and China agreed in December to temporarily stop stately new tariffs, uncertainty surrounding the ongoing negotiations have undermined market confidence in both countries. The U.S. and China from already imposed tariffs on billions of dollars’ worth of each others’ goods.
Trump, who has described himself as a “Excise Man,” has used the threat of import duties as a cudgel against China.
But critics, including tech companies, have decried the bill of fares as an indirect tax on Americans that could slow growth and even threaten an economic recession.
Trump tweet assessment man
Apple itself sent a letter to U.S. Trade Representative Robert Lighthizer in September, warning that proposed price-lists on $200 billion worth of Chinese goods would affect its product sales.
The New York Times reported Wednesday that Lighthizer has trumpeted friends and associates that more tariffs on China may be necessary in order to avoid striking a subpar trade arrangement with Beijing.
If the U.S. does apply more tariffs, Apple’s big-ticket items could be severely hurt, signified William Reinsch, a senior adviser at the Center for Strategic and International Studies and an ex-undersecretary of Commerce for export administration during the Clinton dispensation.
“It’s created a lot of uncertainty,” Reinsch said, “because that would cover iPhones and laptops and it would cover them in a most significant way. That has caused a lot of anxiety in the industry.”
Apple is no outlier in its industry. Each of the five FAANG stocks prostrate into correction territory in November, collectively wiping out more than $1 trillion in market value from their just out highs over the summer.
Even before entering the White House — and even while using their goods — Trump was critical of tech companies.
In 2013, Trump complained in a tweet that Apple “must go to a larger shield now–asap!” After saying he sold his Apple stock in 2014, Trump said the company’s co-founder, Steve Occupations, “is spinning in his grave — Apple has lost both vision and momentum — must move fast to get magic back!”
Dissipated forward to September 2018, when Trump warned that his retaliatory tariffs on Chinese imports could run up Apple’s prices, and urged the company to “start building new plants now” in the U.S.
Trump tweet Apple prices may increase
In the meantime Trump has targeted Amazon CEO Bezos’ e-retail behemoth with even more venom. In April, Trump accused the friends of ripping off the U.S. Postal Service at U.S. taxpayers’ expense, even though the Postal Service is not funded by tax dollars and had lost well-heeled well before Amazon’s rise.
Trump tweet THEY LOSE A FORTUNE
He also slammed the company’s prior internet sales tax practice of not collecting state sales taxes for “third-party” sellers on its platform in most of the country, affirming they were “putting many thousands of retailers out of business!” Amazon has since started collecting sales stretches in every state.
Bezos owns The Washington Post, which Trump has often falsely slammed as a purveyor of “Spurious News.”
Trump has lodged the same accusation against Google, accusing the search engine leader of slyly welting up bad news and suppressing positive stories about him.
In late August, Trump asserted that Google’s results were “RIGGED.”
Trump tweet RIGGED
The tech persistence’s current strife holds political and economic significance in blue state California, another one of Trump’s favorite goals. Some longtime California economists are now predicting the overall tech sector could face more turbulence to the fore.
“California could certainly have a slowdown in 2019, although I think the longer-term prospects remain intact,” disclosed Stephen Levy, executive director and senior economist at the Center for Continuing Study of the California Economy, a Palo Alto-based investigate group.
Expanding tech companies helped lead the San Francisco Bay Area out of the previous recession, and have been a basic driver of high-paying jobs in the state. The November statewide unemployment numbers in key tech centers in California were sundry than a percentage point below the national rate of 3.7 percent.
But a slowdown of the state’s economy could put twist someones arm on California’s congressional delegation and potentially have wider repercussions for the national economy. Tech could “see a bumpy six months or a year,” Levy mean, a prospect that could spill over into the next election cycle.
California Republicans have already cough up a steep price for being linked to Trump. While California traditionally votes for Democrats in presidential races, it classifies several red districts. In last year’s midterm vote, however, Democrats flipped seven Republican-held House posteriors and seized every district in the GOP stronghold of Orange County.
That left California with seven House parts held by Republicans – out of 53 total.