The ongoing trade war with China and the slowing of its economy is a big part of Apple’s staggering losses the past few months, and the California-based tech giant won’t be alone in announcing lower-than-expected earnings, according the chairman of the White House Council of Economic Advisers.
“It’s not going to be just Apple,” CEA chair Kevin Hassett said in an interview on CNN. “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.”
Hassett said China’s slowed economy will hurt the profits of a large number of U.S. companies, but the economic pain in China gives U.S. President Donald Trump all the leverage he needs in ongoing trade negotiations with Beijing and President Xi Jinping.
“That puts a lot of pressure on China to make a deal,” Hassett said. “If we have a successful negotiation with China, then Apple’s sales and everybody else’s will recover.”
Apple said Wednesday after the market close that its sales will be around $84 billion for the third quarter, which ended on Dec. 29, down from estimates of $89 to $93 billion. It was the first time Apple cut its revenue outlook in nearly 20 years.
Shares fell by nearly 10 percent during after-hours trading Wednesday into Thursday morning.
Apple became the first publicly traded U.S. company to be valued at more than $1 trillion dollars on Aug. 2.
The company’s stock peaked at $227.63 on Aug. 27 and since Sept. 24, when the stock was worth $225.74, it’s been all downhill.
Apple stock was trading for about $144 a share shortly before lunchtime on the East Coast on Thursday.
In all, Apple has lost more than $350 billion in shareholder wealth in just three month’s time.
Hassett said we should expect more announcements like Apple’s moving forward.
“The Chinese economy is slowing in a way that I haven’t seen in a decade. That’s going to be bad” for U.S. companies that do business in China, he said.