Apple Caught in Tariff Tempest: Market Cap Sinks Below $3 Trillion as Trade Tensions Loom

Following a recent series of political developments, Apple finds itself once again at the center of a tariff storm. The company’s market capitalization has fallen below the $3 trillion mark after a market slump driven by concerns over the potential imposition of new tariffs.

On May 26th, Apple's supply chain partners listed on the Chinese A-shares market faced notable stock pressure as uncertainty loomed. Notable names such as Luxshare Precision, Lens Technology, GoerTek, and Dongshan Precision dropped by approximately 1% in value following the opening bell.

President Trump's administration recently threatened to impose a 25% tariff on non-US-manufactured iPhones, causing significant concern around Apple’s international supply chain strategy. These announcements have led to a nearly 7% decline in Apple’s shares over five trading days, reflecting mounting investor anxiety.

Analyst Dan Ives from Wedbush maintains skepticism regarding Apple’s potential capability to manufacture iPhones domestically. During a weekend interview, Ives commented on the logistical and financial challenges of this endeavor, adding that substantive transformation in their supply chain could take up to five years and cost between $20 billion and $30 billion. Instead, Apple may resort to negotiating with the US government to offset tariff impacts.

The proposed tariffs are primarily in response to Apple's shift of production to India, where Foxconn plans to manufacture significant quantities of iPhones annually. In fact, Apple sourced 20% of its global iPhone volume from India over the past year, which represents an approximate value of $22 billion.

Producing iPhones in the US, according to some analysts, would exponentially increase costs, potentially pushing consumer prices to unprecedented levels, with estimates suggesting a US-made iPhone could retail at $3500. The tariff implications would likely prompt Apple to pass costs onto consumers rather than absorb them directly.

Additionally, as Apple prepares for its upcoming Worldwide Developers Conference on June 10th, there is hope that showcasing advancements in AI and other technological capabilities may restore some investor confidence amidst the turbulent tariff scenario.