Apple Leads Magnificent 7 Stocks Lower as 'Higher Than Expected' Trump Tariffs Land

The tech sector is reeling from the latest round of tariffs announced by President Trump, with Apple leading the Magnificent 7 stocks lower. The new tariffs, which go far beyond China and hit every nation in the world, have sent shockwaves through the market, causing Apple's stock to plummet almost 7.5% in extended trading on April 3, 2025. This drop is the company's worst since September 2020, when the iPhone 12 launch was delayed due to COVID disruption.

The tariffs, which are set to take effect on April 9, will significantly impact Apple's supply chain. The company relies heavily on manufacturing and assembly in countries like China, India, Malaysia, and Vietnam, all of which are now facing hefty tariffs. For instance, iPhones made in China will face a tariff rate of up to 54%, a combination of the 34% reciprocal tariff announced today on top of the 20% levy the President launched in January. Similarly, imports from Vietnam, a big manufacturer of AirPods, Apple Watch, and MacBook models, will face a 46% tariff rate. Apple suppliers in India will be hit with 26% tariffs, and Malaysia operations will also face tariffs as high as 24%.

The impact on Apple's business is expected to be devastating. The increased cost of production will either see Apple's margins curbed substantially, or the company will be forced to increase the price of its products to compensate, likely lowering demand as customers are turned away by the resultant sticker shock. Analysts are starting to chime in on what they expect to see from these tariffs. Krish Sankar from TD Cowen believes that US sales account for about 31% of total revenues with about 75% coming from hardware products. He estimates that every 10% of tariffs would impact Apple's net income by about 3.5% in FY25 and FY26 EPS. He also estimates that Apple will raise prices to offset tariffs, and estimates that every 10% of tariffs levied can be offset by an about 6% increase in product average selling price. Samik Chatterjee from JP Morgan has also come up with the 6% figure.



Analyst Daniel Ives from Wedbush calls the tariff plan "illogical," and "economic Armageddon" for the global economy, and specifically, the American consumer. Ives reiterates that when other countries are hit with tariffs, it's ultimately the American consumer that bears the entire brunt of the bill. He still considers Apple a focus to own in a stock portfolio, but is expecting to see at least in the short term a 10% hit.

The tariffs are not just impacting Apple. Other tech giants like Nvidia, Tesla, Amazon, Meta, and Google parent company Alphabet have also seen significant drops in their stock prices. Nvidia's shares dropped 4%, while Tesla lost approximately 4.5%. Amazon, Meta, and Google parent company Alphabet all lost between 2.5% and 5%, while Microsoft is down almost 2%.



Investors are now reassessing their portfolios in light of these new tariffs. Some believe this is all bluster, and Trump will carve out exceptions and pull back on some of these measures in short order. Indeed, during the China-US trade war of 2018, Apple secured tariff exemptions on many of its products, notably avoiding any impact on the iPhone, its biggest business segment. However, so far, Apple has been unsuccessful at securing exemptions from Trump, since he began his second term in office this January.

In conclusion, while the new tariffs present significant challenges for Apple and the tech sector as a whole, the company has several strategic options to mitigate their impact. The success of these strategies will depend on how well Apple can navigate the complex trade landscape and adapt to changing market conditions. Investors, on the other hand, will need to diversify their portfolios, hedge their bets, and take a long-term view to weather this storm.