Deere & Co. on Tuesday joined other companies hit by the U.S.-China trade war, after JPMorgan cut its rating on the equipment maker due to worsening conditions for U.S. farmers.
The Moline, Illinois-based company is part of a long and growing list of firms confronted with trade-related challenges for their businesses. Cell phones, toys, game consoles and printers were included in a fresh tariffs list released on Monday, and the likes of Apple Inc., Hasbro Inc. and Western Digital Corp. may be hurt. President Trump continued to tweet about trade on Tuesday morning, with statements including, “When the time is right we will make a deal with China.”
Deere is down 1.2% in pre-market trading -- but Apple is rising 1.2%, and U.S. equity futures are gaining alongside European stocks as investors assess the prospects for global trade and sift for potential winners. AGCO Corp. may be among those poised to advance, JPMorgan said in a note upgrading its recommendation, as it’s got limited exposure to U.S. row crops and a recent sell-off is overdone.
Here’s a look at some newly exposed U.S. companies:
Mobile Phones
Apple tops the list of U.S. companies that face the biggest impact, as it relies on Chinese labor for the production of nearly all of its devices, including iPhones. That product line alone contributed more than half of Apple’s revenue in the quarter that ended on March 31.
A 25% tariff would cost Apple nearly a quarter of its estimated profit in fiscal 2020, Morgan Stanley said in a research note last week. If Apple chose to pass on the higher cost to customers the price of an iPhone XS would jump by about $160 and hurt demand, analysts led by Katy Huberty wrote.
According to Wedbush analyst Daniel Ives, the current trade situation could result in Apple seeing production costs for the iPhone rise 2%-3%, given the impact that trade is having on input materials like lithium batteries. Under a “more draconian scenario,” where additional tariffs are levied, expenses could escalate “by roughly 10%+ over time.”
Any pressure on the Cupertino, California-based company is likely to have a ripple effect throughout its vast global network of suppliers, which includes Broadcom Inc., Qualcomm Inc. and Taiwan Semiconductor Manufacturing Co.
Here’s a list of companies that rank among the highest exposed to Apple, according to Bloomberg supply chain data: