White House predicts 'heck of a lot' of companies sharing Apple pain
US president Donald Trump's trade war with China will force many US companies to join Apple in announcing lower than expected earnings, the chairman of the White House Council of Economic Advisers said.
"It's not going to be just Apple," CEA chairman Kevin Hassett said in an interview on CNN. "There are a heck of a lot of US 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 argued that it is a softer economy in China that is cutting into US companies sales there and that economic pain gives Trump leverage in ongoing trade negotiations. "That puts a lot of pressure on China to make a deal," he said.
In the long run, US companies should benefit despite the short-term damage to their bottom line, he added.
"If we have a successful negotiation with China then Apple's sales and everybody else's sales will recover," he said, before predicting that US economic growth would continue to be strong.
Apple said on Wednesday that the company's sales will be about $84 billion (€74bn) in the quarter ended 29 December, down from earlier estimates of $89 billion to $93 billion. It was the first time the company cut its revenue outlook in nearly two decades. Apple shares fell as much as 9.6% as the market opened in New York on Thursday.
Apple's announcement "is something that one should expect," Hassett said.
"The Chinese economy is slowing in a way that I haven't seen in a decade,"he said. "That's going to be bad" for US companies that have a lot of business in China, he added.