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After taking a big hit in the stock market, Apple rebounded yesterday from a sell-off caused from President Trump’s tariffs. Before its rebound, Apple had dropped around 19%, creating losses of over $638 billion in market cap.
Why was Apple stock badly hit in particular? Investors were on edge as Apple relies heavily on China and other Asian countries subject to massive tariffs for production.
Apple (AAPL) Share Price. Source: TradingView
Apple’s Tariff Trouble
Apple relies heavily on China for manufacturing its products, which is now facing challenges from President Trump’s new decision on raising tariffs on Chinese imports to 125%.
With most of its products especially the iPhone assembled in China, Apple’s production could see a rise in costs that might lead to a decline in profit and forcing price increases for consumers. ⁽¹⁾
China retaliated by setting tariffs on U.S. goods at 84%. This could hurt Apple’s sales in China, one of its largest markets, where demand for premium devices is critical to its revenue.
While Trump’s 90-day tariff pause with other trading partners offers some global relief, the escalating U.S.-China trade war leaves Apple caught in the middle, with little immediate clarity on how to adjust its operations or pricing.
Market Reaction
AAPL stock fell 19% since last week’s tariff news, which is Apple’s worst run since 2001. With $637 billion lost in market cap, the stock has been extremely volatile.
However, after President Trump announced yesterday that he will put a pause on most tariffs, Apple rebounded 15% and raised hope that the iPhone maker could be excused from the levies. ⁽²⁾
President Trump’s Comment on Tariffs
Trump wrote on his social media website Truth Social Wednesday afternoon that he is implementing a 90-day pause on tariffs for most countries whose rates were above 10%, effective immediately. Except China, that is. ⁽³⁾
At the same time, Trump also said that he has increased China’s tariff rate up to 125% as the trade battle between the world’s two largest economies intensifies. That means goods entering the US from China will get even more expensive than previously expected. ⁽⁴⁾
Apple makes most of its iPhones in China through the contract manufacturer Foxconn. If these high levies stick, the price of everything from iPhones to MacBooks would shoot up. ⁽⁵⁾
Price Hikes or Profit Cuts?
Analysts suggest Apple has two options when those tariffs kick in. UBS says the fanciest iPhone, now $1,199, might jump $350—about 30%—if Apple passes costs to buyers.
Barclays’ Tim Long thinks they’ll hike prices, but if they don’t, earnings per share could drop 15%. Apple might shuffle its supply chain, sending products from countries with lower tariffs, but that’s a long shot with Trump’s big plan hitting everywhere. ⁽⁶⁾
What’s Next?
Nobody’s slashing Apple’s 2025 earnings yet. That may change after their May 1st earnings report, though.
If massive tariffs are back again, Apple’s earnings forecasts could be downgraded due to the trade war’s impact, potentially reigniting volatility in the stock once again.
