Trump’s Order To Prohibit WeChat May Hurt Sales Of Apple’s iPhones In China

President Donald Trump’s executive order calling for the prohibition of U.S. companies and residents from transacting business with WeChat, a Chinese messaging app, could hurt sales of Apple’s (AAPL) iPhone in China.

The order, which also banned short-form video app TikTok, would prevent Apple from offering WeChat to its mobile devices through its App Store.

WeChat is owned by Chinese conglomerate Tencent Holdings.

Bloomberg reported that WeChat is “central to digital life in China. It’s the go-to app for a billion people for shopping, payments, email, web browsing and all forms of business and personal communications.”

Anand Srinivasan, an analyst with Bloomberg Intelligence, said as China represents about 20% of Apple’s iPhone sales, withdrawing WeChat from the App Store “would be a serious hindrance.”

Thus without access to WeChat, Chinese consumers might not purchase new iPhones.

Srinivasan also said that Trump’s executive order may lead Chinese authorities to retaliate – which could further hurt Apple, since much of its manufacturing occurs in China.

Moreover, China could reduce the supply of materials like rare earth metals which are important ingredients of iPhones.

“This is a war with battles on multiple fronts and the battle has now escalated into software,” Srinivasan said.

Bloomberg noted that if Chinese consumers reject Apple’s iPhones they will likely purchase more smartphones from Huawei – a company Trump has also targeted.

Trump’s order stated that WeChat “automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.”

Trump added that the app can also obtain personal information of Chinese citizens visiting the U.S.

Referring to the actions against both WeChat and TikTok, political risk consultancy Eurasia Group warned: “The executive orders represent a major escalation on the U.S. side of the confrontation with China over the use of technology and mark the first time the U..S government has attempted to ban a software application running on millions of mobile phones within the U.S.”