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"Boycott Apple" — Trump presidency could affect Apple?

2016-11-16 629 Posted by 3uTools

Republican Donald Trump is now the president-elect in what's being called the biggest upset in American political history.


Silicon Valley figures are already freaking out, but there's one company in particular that soon might find itself in a President Trump's crosshairs.


Apple, the world's most valuable company by market cap, was mentioned specifically by Trump several times during his campaign. And Apple CEO Tim Cook actively campaigned for Hillary Clintone, hosting a fundraiser earlier this year and apparently holding a private meeting with her campaign chairman, John Podesta, in 2015.


Institutions around the world are holding emergency meetings to discuss the ramifications of a Trump presidency. Here's what Cook and his executive team are most likely discussing Wednesday morning:



Tax repatriation


Tax is a critical issue for Apple, and tax reform is the No. 1 issue the company lobbies for in Washington.


It's here that Trump's stated policies might end up working out in Apple's favor. Apple has about $200 billion in cash and marketable securities stashed overseas, and it would have to pay 35% in American taxes to bring it back to the US.


Trump has proposed slashing the tax rate on income held overseas to 10%, most notably during a speech at the Economic Club of New York in September. 


"This wealth that's parked overseas, nobody knows how much it is, some say it's $2.5 trillion — I have people that think it's $5 trillion," Trump said. "We'll bring it back, and it'll be taxed only at the rate of 10% instead of 35%. And who would bring it back at 35%? Obviously nobody, because nobody's doing it."


"The largest beneficiaries of the move would be the big American technology groups," the Financial Times reported on Wednesday.


"Honestly, I believe the legislature and the administration will agree that it's in the best interest of the country and the economy to have tax reform," Cook said in an interview with The Washington Post earlier this vear. "And when we bring it back, we will pay 35% federal tax and then a weighted average across the states that we're in, which is about 5%, so think of it as 40%. We've said at 40%, we're not going to bring it back until there's a fair rate."


Moody's says US companies outside the financial sector hold $1.2 trillion overseas. Apple is the largest hoarder.


There is also the possibility that a Trump administration might retaliate against the European Commission, which earlier this year ordered Apple to pay at least $14.5 billion in taxes. Ireland is appealing the decision.


Apple did not respond to a request for comment. 


American manufacturing


Throughout his campaign, Trump repeatedly called for Apple to build its iPhones in the US. Today, iPhones are assembled in China from mostly Asian components.


"I'm going to bring jobs back," Trump said in March. "I'm going to get Apple to start making their computers and their iPhones on our land, not in China. How does it help us when they make it in China?"


Trump is not the only president or president-elect to challenge Apple to produce a made-in-USA iPhone. President Barack Obama asked former Apple CEO Steve Jobs about the topic in 2011.


It turns out that such a move would be unlikely for avariety of reasons:

 

*Logistical challenges because many of Apple's parts makers are in Asia.

*A lack of manufacturing skills in the US.

*Significantly lower overall costs in China. Some estimates find that American assembly could add over $50 to the cost of making an iPhone, which would make the device significantly less competitive in the global market.


Still, there are ways Trump could encourage Apple to build phones in the US. he once called for a He once called for a 45% tariff on Chinese imports, which would reshape the American economy in unprecedented ways.


Source:bussinessinsider

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