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Apple (AAPL) shares dropped by about 8 percent in early trading Thursday after new tariffs announced by the Trump administration targeted countries where the tech titan produces its products. The stock decline was part of a broader sell-off that saw the S&P 500 down more than 4 percent and the Nasdaq down nearly 6 percent.
Apple relies heavily on China for iPhone production and also produces products in India and Vietnam. The new total tariff rate for products coming from China will now be 54 percent, while rates for India and Vietnam will be 27 percent and 46 percent, respectively. Other countries where Apple has a manufacturing presence will also be affected.
To be sure, it’s unclear what the exact impact from the tariffs will be, or even if they will last. Some officials describe the move as a negotiating tactic to force other countries to lower their tariffs on U.S. goods, while others say it’s part of a long-term plan to reinvigorate U.S. manufacturing.
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Trump tariffs: How Apple will be impacted
Apple’s stock decline was the largest among the major tech companies following the tariff announcement, which makes sense when you consider where the company produces the vast majority of its most popular product, the iPhone.
Apple “now faces unprecedented challenges from Trump’s reciprocal tariffs, if they stick, with Chinese imports now subject to a 54% total rate, impacting roughly 85% of iPhone production,” CFRA analyst Angelo Zino wrote in a note to clients. “No doubt that if the tariffs stick, it will have a negative impact on AAPL’s fundamentals, with downside to margin and earnings expectations.”
Zino expects the company to utilize supply chain efficiencies, pass on higher costs to consumers and eat up some of the costs itself in response to the tariffs.
An Apple spokesperson didn’t immediately respond to a request for comment.
Apple’s investment in the U.S.
Not long ago, some analysts thought that Apple would avoid tariffs on its products thanks to a more than $500 billion planned investment in the U.S. over the next four years, which the company announced in February.
“We are bullish on the future of American innovation, and we’re proud to build on our long-standing U.S. investments with this $500 billion commitment to our country’s future,” Apple CEO Tim Cook said at the time of the announcement.
“We believe Apple’s spending plan is a direct strategy to earn an exemption from tariffs on imports from China,” Morningstar Senior Equity Analyst William Kerwin wrote in a February research note. “Apple was able to earn exemptions from tariffs under the first Trump administration, and we believe it is on a path to do so again.”
The new tariffs are expected to take effect on April 9.
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