President Donald Trump’s top economic adviser agreed with Apple CEO Tim Cook that the company’s recent stock plunge was the result of the administration’s trade war with China -- and warned that more companies may soon feel the pain.
Apple stock tanked late this week after the company slashed its earning forecast, falling 10 percent and driving a general tech stock dive. The drop came after Cook announced that the company cut its earnings projection from between $89 to $93 billion to $83 billion.
In a letter to investors, Cook blamed Trump’s tariffs on steel, aluminum, and Chinese imports and an unexpected drop in global orders.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook wrote. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
“We believe the economic environment in China has been further impacted by rising trade tensions with the United States,” he explained.
The Trump administration agreed with Cook’s characterization. Kevin Hassett, who heads the White House Council of Economic Advisers, told CNN that the CEO was right and predicted that more companies may soon feel the effects of the trade war.
“Until we get a deal with China, it’s not going to be just Apple,” Hassett said Thursday. “There are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China.”
"If we have a successful negotiation with China then Apple sales and everybody else's sales will recover. But right now, China is feeling the blow of our tariffs," he added.
That is a big turnaround from the Trump administration’s oft-repeated claims that the tariffs, which are essentially a tax passed on to consumers, would only hurt China. Hassett himself made that case during a Council of Foreign Relations discussion in March.
“Our steps in this trade dispute have been very well-crafted to put pressure on [China], but not to be super harmful to us,” Hassett boasted at the time.
Now, Hassett is suggesting that the administration intended to hurt China with American companies as collateral damage.
“That puts a lot of pressure on China to make a deal,” Hassett told CNN. “If we have a successful negotiation with China, then Apple’s sales and everybody else’s sales will recover.”
The worry is not limited to Apple and tech stocks. The Dow Jones Industrial Average fell 650 points Tuesday and the Nasdaq and S&P 500 experienced similar drops.
Despite his confidence, Hassett admitted Thursday that “the president is concerned about markets.”
Trump told reporters Wednesday that the stock market is simply experiencing “a little glitch.”
"It's going to go up once we settle trade issues and a couple of other things happen,” he claimed.
In a tweet Friday, Trump blamed the “disruption” in the financial markets on uncertainty driven by Democrats winning the House.
But by Hassett’s own admission, the Trump administration’s policies are a key driver in the stock plunge and the pain American companies are feeling as a result of the trade war.
“This is the weird logic of trade wars in a globalized age,” wrote Vox’s Ezra Klein, “you end up having to celebrate causing damaging your own economy because you're trying to cause even more damage to someone else's economy.”