Trump's Tariff Bombshell Sends Apple Stock Plunging 8.4%
2min read Apple Inc. (AAPL) is facing a seismic disruption to its business model following President Trump's sweeping announcement of reciprocal tariffs on several key U.S. trading partners. By midday Thursday, apple stock had tumbled 8.4%, as investors reacted to what Wedbush analysts described as a “Category 5 Hurricane” hitting the tech sector.
The most critical blow comes from a new 34% tariff imposed on Chinese imports, which when combined with existing baseline tariffs, brings the total to 54%. As Wedbush analysts Dan Ives and Scott Devitt point out, Apple produces “basically all their iPhones in China,” leaving the company extremely exposed to this sudden policy shift.
According to a note from Angelo Zino, CFA, senior equity analyst at CFRA Research, the impact could be severe. “AAPL 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.” Zino adds that Apple’s facilities in Vietnam and India will not be spared either, facing new tariffs of 46% and 26% respectively.
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While Apple has diversified some of its manufacturing outside of China in recent years, Wedbush stresses that “the hearts and lungs of the Apple supply chain are cemented in Asia.” Foxconn's factories in China still produce the lion’s share of iPhones, iPads, Macs, and AirPods.
The challenge now is how Apple absorbs or offsets these costs. Zino expects a three-pronged response: “We think the most likely scenario is that aapl looks to handle the higher costs through a combination of supply chain efficiencies, passing a portion over to consumers, and eating up some of those costs.” But he warns that the company is unlikely to push more than 5–10% of the added cost onto consumers due to a softening macro environment. “Any major increase could have a detrimental impact to revenue,” he cautioned.
With the iPhone 17 launch expected this fall, Apple is likely to delay any significant price hikes until that point, following its usual cadence for pricing adjustments, Zino notes.
Although Apple announced a $500 billion U.S. investment earlier this year in cooperation with the Trump administration, Wedbush remains skeptical about near-term domestic production. “It would take 3 years and $30 billion dollars in our estimation to move even 10% of its supply chain from Asia to the U.S.,” Ives and his team wrote, calling the notion of a U.S.-made iPhone a “fantasy tale” given current labor, infrastructure, and cost realities.
Still, despite the panic and near-term volatility, Wedbush maintains its Outperform rating on Apple, citing long-term fundamentals and the potential for negotiated exemptions or reversals in policy. “If these tariffs prove to be temporary or negotiated in some form, Apple is baking in much worse case scenarios at current levels,” Ives stated.
As it stands, Apple finds itself squarely in the crosshairs of escalating trade tensions—and for now, investors are bracing for impact.
Ask Aime: What will be the long-term impact of the tariffs on Apple's global operations?
