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Apple, tech hardware stocks jump on 10% tariff delay

Shares in Apple Inc. surged Aug. 13 after the Trump administration delayed sweeping tariffs on a number of Chinese imports, including cellphones and laptops.

Apple stock gained 4.23% on Aug. 13 to close at $208.97 after the U.S. Trade Representative's Office said it would delay a 10% tariff on certain groups of Chinese products until Dec. 15. The tariffs had been set to take effect Sept. 1 for $300 billion of Chinese goods. Beyond phones and laptops, products facing a tariff reprieve include video game consoles, certain toys and computer monitors, along with some footwear and clothing items.

The office of the U.S. Trade Representative said that some products would be removed from the tariff list entirely based on "health, safety, national security and other factors."

Wedbush Securities analyst Daniel Ives cheered the tariff delay, saying it removes a major "dark cloud" over Apple's stock in the near-term. Ives had earlier predicted that if Apple was forced to fully absorb the planned tariff, it could negatively impact the company's fiscal year 2020 EPS figures by about 4%.

"For Apple, which has become the poster child of this US/China trade battle, this is a major shot in the arm for the bulls as importantly [Apple] will be facing no tariff noise/costs when the trifecta of iPhones launch in the September time-frame," Ives wrote in an Aug. 13 research note.

Similarly, Evercore ISI analyst Amit Daryanani said the tariff delay represents an "incremental positive" for Apple. The analyst previously estimated the looming tariffs could negatively impact Apple's EPS by between 4% and 8%.

President Donald Trump told reporters Aug. 13, "We're doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers." Trump said any delay beyond Dec. 15 would not be considered.

Notably, Apple's AirPods, Apple Watch and HomePod are not included in the temporary suspension and will face the 10% levy on Sept. 1.

The share price jump at Apple helped drive similar gains in the broader S&P 500 Technology Hardware & Equipment index, which includes Apple as a constituent.

Even with the delay, the Consumer Technology Association said the tariffs taking effect this year stand to have a negative impact on the broader economy and the technology sector.

"We appreciate the administration hearing us about the damage retaliatory tariffs inflict and deciding to delay part of the list – but the uncertainty and volatility of policy based on tariffs is bad for American businesses and is bad for workers, families and the U.S. economy," CTA President and CEO Gary Shapiro said in a statement.

The association estimated the tariffs starting Sep. 1 will affect $52 billion in consumer technology products, while the tariffs starting Dec. 15 will affect $115 billion in products. Since July 2018, tariffs on China have cost the consumer tech industry over $10 billion, according to the group, which represents the $398 billion U.S. consumer technology industry.

"Next month, we'll begin to pay more for some of our favorite tech devices — including TVs, smart speakers and desktop computers. The administration should permanently remove these harmful tariffs and find another way to hold China accountable for its unfair trading practices," Shapiro said.

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