Apple suffers biggest one-day drop in 5 years as Trump's tariffs trigger $300 billion sell-off
AP Photo/Ted Shaffrey
- Donald Trump's "Liberation Day" tariffs sparked a major sell-off in the iPhone maker on Thursday.
- Investors are spooked after Trump slapped heavy tariffs on its key supply chain hubs, such as China.
- It was Apple's biggest one-day drop in five years.
Apple has suffered its biggest one-day drop in five years after Donald Trump's "Liberation Day" tariffs sparked a roughly $300 billion sell-off among investors panicking over their potential impact on the world's most valuable company.
The iPhone maker suffered a roughly 9% drop at market close on Thursday as investors digested the impact of the president's tariff plans, which included a 54% effective tariff rate on China, the central hub for Apple's vast supply chain operations.
Trump slapped China with a 34% tariff in addition to an existing 20% tariff — a move that threatens to raise the cost of imports from Apple's most important manufacturing and assembly base.
Apple's yearslong efforts to diversify its supply chain away from China were also squashed by Trump's plans. Fast-growing hubs in Apple's supply chain, including India, Thailand, Malaysia, and Vietnam, were hit with tariffs well above Trump's 10% global baseline rate.
Though Apple secured an exemption from the tariffs Trump imposed in his first term, there are no signs yet that Apple will be able to secure a similar exemption this time. Apple's market capitalization fell to $3 trillion, wiping almost nine months of gains.
Trump's tariffs add further woes to Apple, which has faced a difficult few months as investor concerns over iPhone sales and future bets such as Apple Intelligence and the Vision Pro have weighed on its stock. Shares are down more than 16% year-to-date.
The tariff plans have raised concerns among analysts about the potential hit to consumer demand for iPhones, iPads, MacBooks, and other Apple products if the company decides to raise prices to counter the spiraling costs it would face from tariffs.
Srini Pajjuri, an analyst at investment bank Raymond James, wrote in a research note published Thursday that Apple would "need to raise US hardware prices by about 30%, all else equal," to fully offset the tariff impact on earnings per share.
If the company chooses not to raise prices, analysts forecast a significant hit to its profit margins, which have long been prized by investors.
Apple was not the only tech company whose shares took a hit on Thursday, with Nvidia down about 7.8% and Tesla down about 5.5%.
The Dow Jones Index closed down nearly 4%, while the S&P was down over 4.8%.
Apple did not immediately respond to Business Insider's request for comment.