What to know

  • Apple stock dropped 7.5% in after-hours trading following the announcement of new tariffs by former President Donald Trump.
  • The tariffs, effective April 9, target countries where Apple sources components, including China, Vietnam, and Taiwan.
  • Apple faces increased costs, with estimates suggesting an additional $8.5 billion annually if exemptions are not granted.
  • CEO Tim Cook has previously highlighted the challenges of U.S. manufacturing compared to countries like China due to a lack of skilled workers.

Apple's stock took a significant hit, falling 7.5% in after-hours trading, after former President Donald Trump announced sweeping tariffs targeting key parts of the company's global supply chain. The tariffs, which will take effect on April 9, impose a minimum 10% duty on all U.S. trading partners, with higher rates for specific countries where Apple sources components for its devices.

Countries like Vietnam, Thailand, China, and Taiwan, where Apple manufactures or sources parts for its iPhones, iPads, and Macs, are facing tariffs ranging from 26% to 46%. Taiwan, a critical supplier of Apple silicon chips, is subject to a 32% tariff, while China, already dealing with a 20% tariff, will see further increases. These measures could significantly impact Apple's production costs.

Analysts at Morgan Stanley estimate that the tariffs could cost Apple an additional $8.5 billion annually if exemptions are not granted. During Trump's previous tenure, Apple managed to secure exemptions for some products, but Trump has stated that no such exemptions will be provided this time.

Apple has been working to diversify its supply chain by moving some manufacturing to countries like India, Vietnam, and Thailand. However, these efforts may be undermined by the new tariffs, which also target these regions. CEO Tim Cook has previously expressed concerns about the U.S.'s ability to compete with countries like China in manufacturing, citing a lack of skilled workers and expertise in advanced tooling.

The tariffs are expected to increase costs for Apple, raising questions about whether the company will absorb these expenses or pass them on to consumers through higher prices. The situation adds to the challenges Apple faces in maintaining its competitive edge in the global market.

Via: macrumors.com