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Can Tech Companies, Automakers Survive Turkey Tariffs?
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On Aug 15, Turkey retaliated by raising tariffs on a range of goods imported from the United States, including electronic goods and cars. The move follows Turkey’s president Recep Tayyip Erdogan’s announcement on Tuesday to boycott all electronic products from the United States, including those of Apple, Inc. (AAPL - Free Report) . Understandably, the move is in retaliation to United States’ decision to raise tariffs on metals imported from Turkey that includes aluminum and steel.
The United States is already into a trade dispute with China, the European Union (EU), Mexico and Canada. Now, the trade spat with Turkey is likely to only escalate the trade war. Tech companies have already been under pressure with shares of a few tech giants suffering on slowing user growth. Similarly, automakers too have started feeling the heat of the trade war, with production costs of vehicles going up.
Turkey in Financial Crisis, Apple Draws the Wrath of Erdogan
The Turkish lira hit a record low against the dollar on Aug 13 after the European Central Bank raised concerns over the country’s economy. This follows Turkey’s president Recep Tayyip Erdogan’s reelection in June in a snap vote. Erdogan’s growing powers has raised questions about the independence of Turkey’s central bank.
Amid all this, tensions between the United States and Turkey escalated last week after a Turkish delegation returned with no apparent solutions regarding the detention of U.S. pastor Andrew Branson, who is facing charges of supporting a group accused of an attempted coup in 2016. On Aug 10, the Trump administration announced plans of doubling tariffs on steel and aluminum imported from Turkey.
In retaliation, Erdogan announced a nationwide boycott of electronic goods imported from the United States, including Apple and followed it up with tariffs of as much as 120% on U.S. made cars among other goods. Erdogan said, “If they have iPhone, there is Samsung on the other side. We have Vestel Venuüs in our country.” Although the Trump administration had reportedly assured Apple that iPhone won’t directly be subject to tariffs, Turkey’s move definitely could affect the company.
Apple, Tech Companies to Suffer?
Apple’s shares have been rallying since it reported third-quarter fiscal 2018 earnings on Jul 31, with robust iPhone and Services segment revenue growth. On Aug 2, Apple emerged as the first publicly traded U.S. company to have $1 trillion in market cap.
Trade disputes have been gripping markets for a while now and tech companies are likely to suffer the most if a full-fledged trade war takes place. In 2017, Turkey had roughly 41.09 million smartphone users, of which 7.15 million use iPhones. Although it’s roughly more than just 1% of the total iPhone users across the world, the number definitely isn’t small. Apple has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The United States and China are the two biggest markets for Apple. As United States’ trade tensions with China and Turkey are on the rise and growth of iPhone unit sales is slowing, the company might be badly hit.
Moreover, major tech companies have been suffering in recent times with slowing user and subscriber growth. Shares of tech giants such as Facebook, Inc. and Netflix, Inc. (NFLX - Free Report) recently took a hit after they reported slowing user growth in their quarterly results. Given this scenario, expanding customer and subscriber base has become a priority for big tech companies but a trade war could act as a major revenue dampener.
Trouble Grows for Automakers
Domestic automakers are already feeling the heat of trade war since China has raised tariffs on U.S.-made cars. Now, with Turkey imposing tariffs of 120% on cars imported from the United States, worries of carmakers have only compounded.
Ford Motor Company (F - Free Report) recently reported that its China sales fell 32% in July from a year earlier. This definitely is a sign that tariffs are finally affecting the unit sales of U.S.-made vehicles in China. Understandably, automakers are left with no choice but to either pass on the costs to their customers or absorb the costs. It now needs to be seen how domestic automakers handle the recent tariff hikes imposed by Turkey.
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Can Tech Companies, Automakers Survive Turkey Tariffs?
On Aug 15, Turkey retaliated by raising tariffs on a range of goods imported from the United States, including electronic goods and cars. The move follows Turkey’s president Recep Tayyip Erdogan’s announcement on Tuesday to boycott all electronic products from the United States, including those of Apple, Inc. (AAPL - Free Report) . Understandably, the move is in retaliation to United States’ decision to raise tariffs on metals imported from Turkey that includes aluminum and steel.
The United States is already into a trade dispute with China, the European Union (EU), Mexico and Canada. Now, the trade spat with Turkey is likely to only escalate the trade war. Tech companies have already been under pressure with shares of a few tech giants suffering on slowing user growth. Similarly, automakers too have started feeling the heat of the trade war, with production costs of vehicles going up.
Turkey in Financial Crisis, Apple Draws the Wrath of Erdogan
The Turkish lira hit a record low against the dollar on Aug 13 after the European Central Bank raised concerns over the country’s economy. This follows Turkey’s president Recep Tayyip Erdogan’s reelection in June in a snap vote. Erdogan’s growing powers has raised questions about the independence of Turkey’s central bank.
Amid all this, tensions between the United States and Turkey escalated last week after a Turkish delegation returned with no apparent solutions regarding the detention of U.S. pastor Andrew Branson, who is facing charges of supporting a group accused of an attempted coup in 2016. On Aug 10, the Trump administration announced plans of doubling tariffs on steel and aluminum imported from Turkey.
In retaliation, Erdogan announced a nationwide boycott of electronic goods imported from the United States, including Apple and followed it up with tariffs of as much as 120% on U.S. made cars among other goods. Erdogan said, “If they have iPhone, there is Samsung on the other side. We have Vestel Venuüs in our country.” Although the Trump administration had reportedly assured Apple that iPhone won’t directly be subject to tariffs, Turkey’s move definitely could affect the company.
Apple, Tech Companies to Suffer?
Apple’s shares have been rallying since it reported third-quarter fiscal 2018 earnings on Jul 31, with robust iPhone and Services segment revenue growth. On Aug 2, Apple emerged as the first publicly traded U.S. company to have $1 trillion in market cap.
Trade disputes have been gripping markets for a while now and tech companies are likely to suffer the most if a full-fledged trade war takes place. In 2017, Turkey had roughly 41.09 million smartphone users, of which 7.15 million use iPhones. Although it’s roughly more than just 1% of the total iPhone users across the world, the number definitely isn’t small. Apple has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The United States and China are the two biggest markets for Apple. As United States’ trade tensions with China and Turkey are on the rise and growth of iPhone unit sales is slowing, the company might be badly hit.
Moreover, major tech companies have been suffering in recent times with slowing user and subscriber growth. Shares of tech giants such as Facebook, Inc. and Netflix, Inc. (NFLX - Free Report) recently took a hit after they reported slowing user growth in their quarterly results. Given this scenario, expanding customer and subscriber base has become a priority for big tech companies but a trade war could act as a major revenue dampener.
Trouble Grows for Automakers
Domestic automakers are already feeling the heat of trade war since China has raised tariffs on U.S.-made cars. Now, with Turkey imposing tariffs of 120% on cars imported from the United States, worries of carmakers have only compounded.
Ford Motor Company (F - Free Report) recently reported that its China sales fell 32% in July from a year earlier. This definitely is a sign that tariffs are finally affecting the unit sales of U.S.-made vehicles in China. Understandably, automakers are left with no choice but to either pass on the costs to their customers or absorb the costs. It now needs to be seen how domestic automakers handle the recent tariff hikes imposed by Turkey.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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