Whenever there is a crisis, in the business section reporters reach out to many analysts for their viewpoint and the analysts will run their models to set expectations. Later the analysts will do more analysis, but the first draft will be able to give a good idea of what will likely happen, given the existing conditions. In every industry there are analysts doing similar work, but the ones that are reported on tend to be the higher profile companies.

In an article by Irene Galea and Sean Silcoff of Reuters, they wanted to know how will the tariffs announced by President Trump affect Apple.

The design and headquarters of Apple is in the US, but Apple became the world’s most valuable company by leveraging global-supply chains to make its best-selling consumer products. With a stroke of a pen or Sharpie, President Trump has changed that strength to a vulnerability.

80% of its iPhones are made in China with the other 20% made in India. The majority of its smart watches are made in Vietnam and the Mac computer is made in Malaysia. All those countries were put with high tariffs by the President.

36% of Apple’s revenues were generated in the US. If tariffs remain the same, importing the goods would cost Apple $39.5 billion a year which would slash its operating profit and annualized earnings by a third.

The solution is to raise prices for consumers to offset the rates or absorb the expenses seriously eroding margins. Counterpoint Research co-founder Neil Shah, believes prices will need to go up a minimum of 30%. If prices go up 30% will demand drop? how much is the question.

The other option is for Apple to lobby for exemptions based on the projected announcement of a new AI factory in Texas as part of a $500 billion investment in the US over the next 4 years.

Linking to dividend paying stocks, while the questions are known to everyone, the answers are generally a range and how efficient supply chains are and how much to raise prices not affecting sales and margins is an unknown, only the consumer knows the answer. All dividend paying stocks have analysts falling their companies which is why many companies fall into the estimates of projections. For slow growth companies it is only when something goes wrong, that estimates are not in line, for growth companies, beating estimates is a good thing.

There are more questions than answers, till the next time – to raising questions.