Escalating Trade War Between Trump and China Poses Severe Risks to Apple’s Global Supply Chain

Trade War Escalations Impacting Apple

Overview

• Date: April 21, 2025
• Authors: William Gallagher
• Key Points:
  • President Trump reportedly pressures countries to limit business dealings with China.
  • China responds by threatening reciprocal countermeasures.
  • Analyst Ming-Chi Kuo highlights severe risks for Apple if other countries also raise tariffs on Chinese goods.
  • Apple benefits from a temporary exemption to the China tariffs.

Context

• Previous Tariff Actions: In response to Trump's tariff of 145%, China halted rare earth mineral exports but did not escalate further.
• Current Situation: CNBC reports that isolating China is a key part of White House negotiations. China opposes any deal at its expense and accuses the US of coercion.

Analyst Insights

• Ming-Chi Kuo: If only the US imposes high tariffs, Apple's risks are manageable. However, if other countries also raise tariffs, Apple may need to establish more non-China iPhone production lines, leading to immeasurable and uncontrollable risks.

Apple's Tariff Exemption

• Temporary Relief: Apple received a temporary exemption from China tariffs, which led to a rise in stock prices. However, the relief is only temporary, and shares have since fallen below pre-tariff levels.
• Future Implications: Despite the exemption, Apple faces further tariffs following an investigation into national security concerns with semiconductor production.

Market Impact

• Stock Performance: Apple's stock initially rose from $198.15 to $211.44 after the exemption but has since dropped to $190.90.
• Commerce Secretary Statement: Howard Lutnick stated that semiconductor tariffs are expected within a month or two.

Conclusion

• The ongoing trade war and potential future tariffs pose significant risks for Apple, with the company facing challenges in maintaining production and market stability.