Apple's Market Cap Slips Amid Trade War, Company Airlifts iPhones from India to Mitigate Tariffs

Apple, long a titan of the tech industry, has recently encountered significant hurdles that have reshaped its standing in the global market.

The company has lost its position as the world's most valuable public company to Microsoft. This shift, coupled with Apple's exposure to escalating trade wars, particularly with China, India, and Vietnam, has prompted drastic measures, including airlifting iPhones from India to the US to cushion the impact of looming tariffs.

Apple Loses Top Market Cap Rank to Microsoft

Apple's reign as the world's most valuable public company came to an abrupt end on Tuesday, when its stock plummeted nearly 5% in a single day. This drop reduced Apple's market capitalization to below $2.6 trillion, while Microsoft's stood firm at $2.65 trillion, crowning it the new leader. The catalyst for this decline was President Trump's announcement of steep tariffs on Chinese imports, set to take effect on April 9, which rattled investors and exposed Apple's vulnerabilities.

Since the tariff announcement, Apple's stock has tumbled over 20% in just four trading sessions, erasing nearly $775 billion in market value—a sum exceeding Tesla's entire market capitalization and surpassing that of all but seven US companies.

This performance marks Apple as the weakest link among the "Magnificent Seven" tech giants, a group that includes Tesla, Amazon, Nvidia, Meta Platforms, Alphabet, and Microsoft. Tesla, the second-worst performer, saw a 21.5% decline since Trump announced the tariff policy, while Amazon, Nvidia, and Meta dropped between 12% and 13% over the same period. Alphabet and Microsoft, relatively resilient, fell by 7.7% and 7.2%, respectively. Unlike during the first Trump administration, when Apple secured exemptions from US-China trade war tariffs, the company has found no such relief this time, amplifying investor concerns about its heavy reliance on China, where it assembles an estimated 90% of its products.

Exposure to Trade Wars and a Bold Response

Analysts have pinpointed Apple as one of the most vulnerable companies to the trade war, owing to its dependence on manufacturing hubs in China, India, and Vietnam. With 90% of its production rooted in China, any disruption in this supply chain—whether from tariffs, geopolitical tensions, or retaliatory measures—poses a significant threat to Apple's operations and profitability. The company's efforts to diversify its manufacturing base, including a gradual shift to India and Vietnam, have yet to offset this reliance substantially.

In a striking countermeasure, Apple airlifted five cargo planes loaded with iPhones from India to the US over just three days, starting March 25. This urgent operation, executed by its suppliers, aimed to stockpile inventory in US warehouses before the April 9 tariff deadline. The shipments, primarily sourced from India and China—Apple's largest iPhone producers—were designed to preempt shortages as American consumers began panic-buying in anticipation of price increases. This move reflects Apple's attempt to maintain supply stability and meet heightened demand spurred by the tariff threat.

With iPhone profit margins reaching up to 47%, Apple has some financial flexibility to absorb tariff costs. Yet, if they wish to maintain the same profit even under the tariff pressure, the company will likely to pass these costs onto consumers triggering price hikes, potentially dampening demand—a risk the company is keen to avoid as it navigates this turbulent period.

Looking ahead, Apple's ability to further diversify its manufacturing will be critical. Success in this endeavor could bolster resilience against future trade disruptions. However, failure to adapt could see Apple grappling with sustained supply chain issues, higher costs, and eroded market confidence, allowing competitors like Microsoft to widen their lead.

The broader tech industry may feel the ripple effects as well. Companies reliant on global manufacturing could face similar pressures, driving up costs and prompting a reevaluation of supply chain strategies. This trade war could accelerate a shift toward regionalized production, reshaping the global manufacturing landscape.