Apple shares took a significant hit, dropping 7% in Frankfurt after former U.S. President Donald Trump announced new tariffs on trading partners, including China, where Apple sources the majority of its products.
According to a Citi research note, Apple could face a 9% hit to its total gross margin if it does not receive an exemption from the tariffs. The tech giant relies on China for more than 90% of its manufacturing, making it highly vulnerable to U.S.-China trade tensions.
How Trump’s Tariffs Could Impact Apple’s Profits
The newly imposed 54% cumulative tariffs on Chinese imports could make Apple’s supply chain significantly more expensive. If the company does not pass the costs on to consumers, it risks a major dent in profitability.
Apple has been working to diversify its supply chain, with some manufacturing shifting to India and Vietnam, but China remains its dominant production hub. Investors fear that prolonged trade tensions could impact Apple’s long-term growth and margins.
Investor Concerns Over Apple’s Future
Apple’s reliance on China raises concerns about potential further stock declines if the company struggles to navigate the tariff challenges. Investors will be watching closely to see whether Apple receives an exemption or adjusts pricing strategies to absorb the impact.
With the global economy still adjusting to trade uncertainties, Apple’s ability to maintain profitability and consumer demand in the face of rising costs will be a key factor in determining its future stock performance.
