Apple CEO Tim Cook, center, watches during the inauguration ceremonies for President Donald Trump, right, and Vice President JD Vance, left, in the rotunda of the U.S. Capitol in Washington, Jan. 20, 2025.
Shawn Thew | Afp | Getty Images
In the past few years, Apple has sold Americans iPhones made in India, AirPods from Vietnam and Mac desktops assembled in Malaysia. It was part of a strategy by Apple to diversify its manufacturing from China.
Apple employed the strategy as a hedge for its supply chain after the company dealt with tariffs by the first Trump administration, supply chain issues tied to Covid and chip shortages that revealed the risk the company was at by primarily producing out of China.
It seemed like a solid strategy. Until President Donald Trump’s “reciprocal tariffs” this week hit those countries, too.
Now, Apple is leading the decline among technology stocks on Thursday after the company’s secondary production locations were all included in the round of tariffs announced by Trump on Wednesday.
The company’s shares fell over 9% on Thursday versus a 6% decline for the Nasdaq. That wiped out over $300 billion in market cap for the iPhone maker and was the worst one-day performance for the stock since March 2020.
“When you 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 escape,” Morgan Stanley analyst Erik Woodring told CNBC’s “Closing Bell.”
To offset the price of the tariffs, Apple may have to raise prices across its product lines by 17% to 18% in the U.S., Woodring estimates. But there’s still a lot of uncertainty about what Apple will do and how China might retaliate against the United States, Woodring said.
“In this type of environment, you have to think worst-case scenario,” he said. “It seems like each side in this geopolitical scenario is kind of digging in.”
Apple didn’t respond to a request for comment on Thursday on its reaction to the Trump tariffs or if it might raise prices in the U.S. It also hasn’t commented on CEO Tim Cook’s reported meetings with Trump this year or what they’ve discussed.
“We are monitoring the situation and don’t have anything more to add than that,” Cook told analysts on an earnings call in January.
Apple could still get product exemptions on U.S. tariffs, similar to how it navigated tariffs on China during the first Trump administration. But if it doesn’t, tariffs will threaten its business.
An employee works at the factory of Rising Stars Mobile India Pvt., a unit of Foxconn Technology Co., in Sri City, India on July 11, 2019. Foxconn, also known as Hon Hai Precision Industry Co., opened its first India factory four years ago.
Karen Dias | Bloomberg | Getty Images
“Substantially all” of Apple’s manufacturing is done in China, India, Japan, South Korea, Taiwan and Vietnam, according to a financial filing in November. Apple warned investors that tariffs could hurt its business, prompt it to increase 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 can be particularly significant if these restrictive measures apply to countries and regions where the Company derives a significant portion of its revenues and/or has significant supply chain operations,” Apple wrote in 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’re going to build their plants here.” Apple has manufactured a high-end desktop computer called Mac Pro in Texas, but the vast 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 company hasn’t committed to manufacturing its high-volume products on American shores.
The company’s resistance to doing final manufacturing in the U.S. is a long-running stance for the company. 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’s unlikely as it would be expensive for Apple to bring its supply chain to the U.S.
“The reality is it would take 3 years and $30 billion dollars in our estimation to move even 10% of its supply chain from Asia to the US with major disruption in the process,” Wedbush analyst Dan Ives wrote in a Thursday note.
Apple investors will want to know how much Trump’s tariffs will hurt the company’s earnings.
Earlier this year, several analysts forecast relatively small declines in the company’s earnings-per-share under a new trade regime, partially based on the assumption that Apple could use its secondary production locations to avoid tariffs on U.S. goods imported from China.
Now, analysts are trying to model how Apple could balance price increases to its products versus eating the extra costs itself. Apple doesn’t often raise prices outside of a new product introduction, and it’s expected to release new phones in September.
“No doubt that if the tariffs stick, it will 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.
WATCH: Which Megacaps are best positioned to weather Trump tariffs
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