Investing.com — Apple Inc (NASDAQ:) is less vulnerable to higher trade tariffs due to a potential Donald Trump presidency, Bernstein analysts said, although higher tariffs across the board still created margin pressure for U.S. electronics makers.
Bernstein estimated that even if U.S. IT hardware companies were to raise prices by 20% due to higher tariffs, net profits would be significantly affected, especially for companies with lower gross margins. Dell Technologies Inc (NYSE:) and HP Inc (NYSE:) seemed the most vulnerable IBM (NYSE:) was probably the least affected.
Bernstein analysts said Apple was less vulnerable than the broader consensus would suggest because its high gross margins could absorb higher tariffs despite high exposure to its technology supply chain, especially in China. The company is expected to see earnings per share of 7%.
Trump — who was ahead of Kamala Harris in early counts ahead of the 2024 election — has proposed steep trade tariffs on imported goods regardless of country of origin.
For China, however, Trump has proposed a 60% tariff on all goods, and even 200% on goods from Mexico. While Trump may not need congressional approval to impose the duties, Republicans were seen gaining majorities in both the Senate and House of Representatives.
U.S. tech companies would likely raise prices in response to the higher tariffs, Bernstein said, but the overall impact on their margins would depend on the price increases and the potential elasticity of the increases.
Bernstein rates Apple and Dell as Outperform, and HP and IBM as Market-Perform.
The brokerage noted that U.S. companies faced more potential downside risks if China imposed retaliatory tariffs.
