Apple Warns on Impact of Trade Disputes, Protectionism in Filing

(Bloomberg) -- Apple Inc. warned in a regulatory filing on Wednesday that the brewing trade war between the U.S. and China could hurt its business.

Apple said tariffs and other protectionist measures may "adversely affect" the company, according to a new section of its quarterly filing with the Securities and Exchange Commission. Here’s the company’s explanation of the potential risks:

"International trade disputes could result in tariffs and other protectionist measures that could adversely affect the Company’s business. Tariffs could increase the cost of the Company’s products and the components and raw materials that go into making them. These increased costs could adversely impact the gross margin that the Company earns on sales of its products. Tariffs could also make the Company’s products more expensive for customers, which could make the Company’s products less competitive and reduce consumer demand. Countries may also adopt other protectionist measures that could limit the Company’s ability to offer its products and services. Political uncertainty surrounding international trade disputes and protectionist measures could also have a negative effect on consumer confidence and spending, which could adversely affect the Company’s business."

On a conference call with analysts on Tuesday, Chief Executive Officer Tim Cook said the tariffs that have been announced so far don’t directly affect Apple products. But he’s investigating the latest proposed tariffs and said he would share his response with the government. Trade relations need to be modernized in some cases, but tariffs are usually not the way to do it, the CEO said.

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