Amid an ongoing tariff war between the US and China, Apple CEO Tim Cook said tariffs can bring about “significant risk of unintended consequences” and hoped that “calm heads prevail” as the two giant economies sort out their trade tensions. The US imposed a tariff on steel and aluminum and other tariffs totalling about USD 50 billion of goods from China.
Cook said none of Apple’s products were directly affected by those tariffs. The Trump administration plans to propose slapping a 25-per cent tariff on USD 200 billion of imported Chinese goods after initially setting them at 10 per cent. Cook said Apple is evaluating this tariff and will be sharing its views of it with the administration. “…Our view on tariffs is that they show up as a tax on the consumer and wind up resulting in lower economic growth and sometimes can bring about significant risk of unintended consequences,” Cook said yesterday during Apple’s third quarter earnings call.
Replying to a question on tariffs, Cook said trade relationships and agreements between the US and other major economies are “very complex” and some in need of “modernizing”, but added that in the vast majority of situations tariffs are not the approach to achieving and encouraged “dialogue” to address trade concerns. Cook expressed optimism that the trade issues between the US and China will get sorted out because there is an “inescapable mutuality” between the two countries that “sort of serves as a magnet to bring both countries together, that each country can only prosper if the other does and of course the world needs both US and China to prosper for the world to do well.”
Reiterating his optimism that the countries will get through this, Cook said “we are hoping that calm heads prevail.” “It’s actually a tedious process in going through it because you not only have to analyze the revenue products, which are a bit more straightforward to analyze, but you also have to analyze the purchases that you’re making through other companies that are not related to revenue,” he said. Cook added that the risk associated with more of a macroeconomic issue such as an economic slowdown in one or more countries or currency fluctuations that are related to tariffs is very difficult to quantify.
Announcing the results for fiscal 2018 third quarter ended June 30, Cook said Apple had the best June quarter ever, posting quarterly revenue of USD 53.3 billion, an increase of 17 per cent from the year-ago quarter. International sales accounted for 60 per cent of the quarter’s revenue. However revenue was down 13 per cent from the 61.1 billion dollars clocked in the second quarter of 2018. “We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” Cook said adding that the third quarter results were driven by continued strong sales of iPhone, Services and Wearables.
Apple’s Chief Financial Officer Luca Maestri said the company saw “great momentum” in sales of the Mac in many emerging markets, with growth well into double digits. “We established new June quarter records for Mac sales in India, Turkey, Chile and Central and Eastern Europe,” he said. iPhone too had a very strong quarter and revenue from the phones sales was up 20% year-over-year, the company said. The company sold 41.3 million iPhones in the third quarter, a 21 per cent decline from the 52.2 million units sold in the second quarter of the year.