A CHUNKY ACQUISITION FOR MOST OF THE CANADIANS.

its cost of capital, like its recent acquisition of MPX Bioceutical. A Canopy-like deal “doesn’t seem to check any of those boxes,” he said.

Canadian company Aphria Inc. would have similar reservations about modelling a cross-border deal on the Canopy-acreage structure, said CEO Irwin Simon.

The problem with a deal that’s contingent on U.S. legalization is the buyer has no input into how the target is run in the interim and has no control over how the regulations develop, Simon said.

“Do I want to commit major resources to that today? I’d rather go buy lottery tickets,” he said.

The U.S. market is too big for Canadian cannabis companies to ignore, said Dan Daviau, CEO of Canaccord, which advised on the Canopy-acreage deal.

“Canadian companies are concerned about whether, when the wall comes down, will there be anything left or will the U.S. guys already be too firmly established,” Daviau said.

Many of the biggest U.S. pot firms are already beyond the reach of Canada’s licensed producers, said Daviau, pointing to Wakefield, Mass.-based Curaleaf Holding Inc.’s Us$4.9-billion market value.

“That would be a chunky acquisition for most of the Canadians,” he said. “The U.S. companies are evolving to a state where they’re not going to be bought by a Canadian company.” SAN FRANCISCO/WASHINGTON • For more than a year, Apple Inc. avoided major damage from the U.S. trade war with China, thanks in part to a White House charm offensive by chief executive Tim Cook. But the company now faces its first major hit — from both sides of the dispute.

A new round of tariffs proposed by the U.S. on Monday includes mobile phones, meaning the iphone, Apple’s most-important product that is made almost entirely in China, may be encumbered with a 25-per-cent import levy. There are other products on the list that would affect Apple too, such as laptops and tablets.

That leaves the company with a difficult choice: Raise prices on already-pricey products and risk missing out on sales, or absorb the extra cost and let profits suffer.

There’s a “very real risk of higher import costs and/or U.S. consumer demand destruction depending on whether Apple decides to pass along some of the tariff cost,” Krish Sankar, an analyst at Cowen Inc., wrote in a note to investors. “Given that the majority of Apple’s hardware products that include the iphone, ipad, Watch, and Mac systems are assembled and imported from China, the earnings risk could be quite substantial.”

China retaliated on Monday with plans to increase tariffs on U.S. imports to 25 per cent from 10 per cent. That would apply to components for the ipad and iphone. So when U.s.-made parts including glass screen covers and facial-recognition sensors are shipped to China for assembly into iphones and ipads, they will be more expensive, too.

The main concern is the iphone, though. It accounted for 63 per cent of sales in 2018, and serves as a hub for additional revenue from services and related devices like the Apple Watch. The newest iphones cost US$750 to US$1,450, so any price increases could take the devices beyond the budgets of more consumers.

The heightened trade tensions are a test for Cook and the global supply chain he helped build and run. Last year, the CEO showed political prowess by meeting with U.S. President Donald Trump to argue against tariffs.

Just over a year ago, Cook met Trump in the Oval Office. The CEO said he opposed the president’s approach and focused on how co-operation between countries can boost the economy more than nations acting alone. After the meeting, the administration told Cook it would not place tariffs on iphones, The New York Times reported.

Apple also wrote to U.S. Trade Representative Robert Lighthizer in September asking him to reconsider tariffs and instead take other measures that would support the U.S. economy and American consumers. Later that month, the White House spared Apple’s Watch and Airpods.

By late 2018, Apple’s strategy had become less effective. In late November, Trump told The Wall Street Journal he might impose tariffs on mobile phones and laptops, and said consumers “could stand” a 10-per-cent increase in prices “very easily.” The day after, Cook toured schools in Idaho with Ivanka Trump, the president’s daughter and senior adviser.

As 2019 began, the real cost of the trade war for Apple began to emerge. The company cut revenue projections and Cook said the Trump administration’s trade policies had indirectly hurt consumer demand for iphones in China.

More recently, the company has raised prices when it refreshed products that have already been hit with tariffs. The updated Apple Pencil, launched in October, costs US$30 more than the previous version. The faster Mac mini costs US$300 more than its predecessor.

Tim Cook