Apple CEO Tim Cook, center, watches through the inauguration ceremonies for President Donald Trump, right, and Vice President JD Vance, left, within the rotunda of the U.S. Capitol in Washington, Jan. 20, 2025.
Shawn Thew | Afp | Getty Images
Prior to now few years, Apple has sold Americans iPhones made in India, AirPods from Vietnam and Mac desktops assembled in Malaysia. It was a part of a technique by Apple to diversify its manufacturing from China.
Apple employed the strategy as a hedge for its supply chain after the corporate handled tariffs by the primary Trump administration, supply chain issues tied to Covid and chip shortages that exposed the danger the corporate was at by primarily producing out of China.
It gave the impression of a solid strategy. Until President Donald Trump’s “reciprocal tariffs” this week hit those countries, too.
Now, Apple is leading the decline amongst technology stocks on Thursday after the corporate’s secondary production locations were all included within the round of tariffs announced by Trump on Wednesday.
The corporate’s shares fell over 9% on Thursday versus a 6% decline for the Nasdaq. That worn out over $300 billion in market cap for the iPhone maker and was the worst one-day performance for the stock since March 2020.
“While you take a look at the reciprocal tariff to countries like markets like Vietnam, India, and Thailand, where Apple diversified its supply chain to, there’s nowhere to flee,” Morgan Stanley analyst Erik Woodring told CNBC’s “Closing Bell.”
To offset the value of the tariffs, Apple could have to lift prices across its product lines by 17% to 18% within the U.S., Woodring estimates. But there’s still a whole lot of uncertainty about what Apple will do and the way China might retaliate against the USA, Woodring said.
“In the sort of environment, you have got to think worst-case scenario,” he said. “It looks as if either side on this geopolitical scenario is sort of digging in.”
Apple didn’t reply to a request for comment on Thursday on its response to the Trump tariffs or if it would raise prices within the U.S. It also hasn’t commented on CEO Tim Cook’s reported meetings with Trump this yr or what they’ve discussed.
“We’re monitoring the situation and haven’t got anything more so as to add than that,” Cook told analysts on an earnings call in January.
Apple could still get product exemptions on U.S. tariffs, much like the way it navigated tariffs on China through the first Trump administration. But when it doesn’t, tariffs will threaten its business.
An worker works on the factory of Rising Stars Mobile India Pvt., a unit of Foxconn Technology Co., in Sri City, India on July 11, 2019. Foxconn, also referred to as Hon Hai Precision Industry Co., opened its first India factory 4 years ago.
Karen Dias | Bloomberg | Getty Images
“Substantially all” of Apple’s manufacturing is finished in China, India, Japan, South Korea, Taiwan and Vietnam, based on a financial filing in November. Apple warned investors that tariffs could hurt its business, prompt it to extend its prices and even force it to stop offering certain products altogether.
Apple’s official list of suppliers – representing 98% of its spending on materials, manufacturing, and assembly – is heavily weighted to countries disproportionately affected by Trump tariffs.
India has a 26% tariff, Japan got a 24% duty, South Korea is at 25%, Taiwan is 32%, Vietnam got 46% tariffs placed and Malaysia received a 24% tariff. China, meanwhile, is now at a 54% tariff rate after Wednesday’s 34% bump to its existing 20% tariffs.
“The impact might be particularly significant if these restrictive measures apply to countries and regions where the Company derives a good portion of its revenues and/or has significant supply chain operations,” Apple wrote within the filing.
The tariffs are intended to bring manufacturing back to the U.S., Trump has said. He specifically cited Apple during his announcement, saying “they’ll construct their plants here.” Apple has manufactured a high-end desktop computer called Mac Pro in Texas, however the overwhelming majority of its final assembly takes place overseas.
Apple’s $500 billion U.S. investment, touted by Trump on Wednesday, includes planned purchases of parts and chips from U.S. suppliers, but the corporate hasn’t committed to manufacturing its high-volume products on American shores.
The corporate’s resistance to doing final manufacturing within the U.S. is a long-running stance for the corporate. In 2011, late Apple founder Steve Jobs told former president Barack Obama that “those jobs aren’t coming back” when asked about made-in-USA iPhones.
Analysts agree that is unlikely as it might be expensive for Apple to bring its supply chain to the U.S.
“The truth is it might take 3 years and $30 billion dollars in our estimation to maneuver even 10% of its supply chain from Asia to the US with major disruption in the method,” Wedbush analyst Dan Ives wrote in a Thursday note.
Apple investors will wish to know the way much Trump’s tariffs will hurt the corporate’s earnings.
Earlier this yr, several analysts forecast relatively small declines in the corporate’s earnings-per-share under a brand new trade regime, partially based on the idea that Apple could use its secondary production locations to avoid tariffs on U.S. goods imported from China.
Now, analysts try to model how Apple could balance price increases to its products versus eating the additional costs itself. Apple doesn’t often raise prices outside of a brand new product introduction, and it’s expected to release recent phones in September.
“Little doubt that if the tariffs stick, it should have a negative impact on Apple’s fundamentals, with downside to margin and earnings expectations,” CFRA Research analyst Angelo Zino wrote in a Thursday note.
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