Apple Inc. shares tumbled on Tuesday after the Trump administration confirmed it will implement a 104% tariff on goods imported from China beginning Wednesday, a move that could drastically inflate iPhone prices and squeeze the company's margins. The announcement sent Apple stock sliding after an early rally, closing deep in negative territory amid a broader tech sector sell-off.
The Cupertino-based company builds most of its flagship iPhones in China, placing it directly in the crosshairs of President Donald Trump's expanded tariff regime. Following an earlier 54% duty, Trump on Monday posted to Truth Social that he would impose an additional 50% tariff unless China reversed its retaliatory 34% levy by Tuesday. The final increase is now confirmed.
UBS analysts estimate the iPhone 16 Pro Max, currently priced at $1,199, could rise by as much as $350 under the new tariffs. "Based on the checks we have done at a company level, there is a lot of uncertainty about how the increased cost sharing will be done with suppliers, the extent to which costs can be passed on to end-customers, and the duration of tariffs," UBS analyst Sundeep Gantori said.
Apple shares have dropped nearly 20% over the past three trading days, erasing approximately $640 billion in market capitalization. JPMorgan Chase estimates Apple may raise prices 6% globally, while Barclays' Tim Long suggests the company could take a 15% hit to earnings per share if it absorbs the costs instead.
Baird analyst William Power previously projected Apple's gross margin could fall from 46.8% to 44.4% in 2025 under the initial tariff plan. With the new 104% rate, the impact could be more severe. Morgan Stanley added that tariffs may cost Apple $34 billion annually and noted that diversification to countries like India and Vietnam may offer little relief. "If the product is not made in the US, it will be subject to a hefty import tariff," the firm stated.
Apple attempted to shift more production to India in recent years, but even goods from that country are now subject to a 26% duty. The Trump administration has made it clear that moving production to U.S. soil is the preferred path.
White House Press Secretary Karoline Leavitt said Tuesday, Trump "believes we have the labor, we have the workforce, we have the resources" to produce iPhones domestically.
But Wedbush analyst Dan Ives warned that localizing Apple's supply chain is unfeasible in the short term. "The reality is it would take 3 years and $30 billion in our estimation to move even 10% of [Apple's] supply chain from Asia to the US with major disruption in the process," Ives wrote. "If consumers want a $3,500 iPhone we should make them in New Jersey or Texas or another state."
