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Apple‘s brand power can help the technology giant cope with some of the pain of the trade war, D.A. Davidson senior research analyst Tom Forte told CNBC on Friday.
“To the extent that the tariffs increase the price of their products to consumers … I would argue they could offset that to the extent they’ve got brand power and consumers generally are willing to pay more for their products,” Forte said on CNBC’s “Closing Bell.”
In a letter to the U.S. Trade Representative, Apple said PresidentDonald Trump‘s proposed tariffs on $200 billion in Chinese goods cover a wide range of its products, pulling the country’s largest tech company squarely into the crosshairs of ongoing trade tensions. As first reported by Bloomberg, Apple said the Apple Watch and AirPods headphones, as well as the Mac mini desktop computer, Apple Pencil stylus, various chargers, adapters and manufacturing equipment would likely be affected. The letter did not offer an estimate of how much the tariffs would increase its costs.
Forte said it’s possible Apple will experience “mid-single-digit to high-single-digit increases in their products” but since the iPhone hasn’t been projected to be impacted yet, it may not be too serious.
“I think the one that’s been talked about the most, historically, has been the Apple Watch, which, admittedly, is not one of their most important products. It’d be a lot more damaging if it was hitting the smartphones,” Forte said.
The other snag posed by the potential tariffs is lost sales in China, Forte said. That problem may not have quite as simple a solution.
“They generate a lot of revenue by selling their products to consumers in China,” Forte said.
Apple shares closed down nearly 1 percent Friday, after gaining as much as 1 percent earlier in the session.