Apple Stock Drops 2% Amid Trump's 25% iPhone Tariff Threat

Apple Inc. faced a significant threat from U.S. President Donald Trump, who warned that the company would face a 25% tariff on iPhones if they are not manufactured in the United States. This announcement led to a 2% drop in Apple's stock price during Friday's trading session. Analysts have expressed skepticism about the feasibility of Apple complying with Trump's demands to alter its global manufacturing processes.

Apple's stock has been on a downward trajectory, approaching its eighth consecutive trading day of decline, which would be the longest such streak since January 2022. The potential impact of a 25% tariff on iPhones manufactured outside the U.S. has raised concerns among industry experts. If Apple were to pass on the increased costs to consumers, its market share in the U.S. could be at risk. Alternatively, Apple could absorb the higher import costs, which could result in a significant decrease in its gross profit margin by 300-350 basis points by the 2026 fiscal year.

Even if Apple were to agree to manufacture iPhones in the U.S., it could take several quarters to implement such a change. The logistical and financial challenges of shifting production to the U.S. are substantial, and the process could take between 5 to 10 years. Analysts have described the situation as "disappointing" for investors, as the idea of Apple manufacturing iPhones in the U.S. is seen as an unrealistic scenario.

Critics have labeled Trump's threat as "absurd," noting that he has a history of making grandiose tariff threats that he has not followed through on. There is no indication that Trump will impose a 50% tariff on the European Union or a 25% tariff on iPhones. The repeated threats have diminished their credibility, but the constant pressure could eventually force a response from the affected industries. The economic impact of such prolonged uncertainty is significant, as businesses cannot operate indefinitely under the threat of sudden and severe tariffs.

Apple's CEO, Tim Cook, is in a difficult position, with limited options to navigate the current situation. The likelihood of Apple shifting its primary iPhone assembly operations to the U.S. in the near term is minimal. The ongoing tension between Apple and Trump could lead to increased short-selling of Apple's stock as investors react to the uncertainty and potential financial impact of the tariff threats. Trump's social media post highlighted his long-standing demand for Apple to manufacture iPhones in the U.S., stating that if this does not happen, the company would face at least a 25% tariff. This stance underscores the complex dynamics between the U.S. government and major corporations, with significant implications for the global tech industry.