Apple stock drops 19%, loses $638b as tariffs threaten iPhones

Apple’s stock fell 3.7% on Apr. 7, 2025, bringing its total decline over three days to 19%. This drop has resulted in a loss of US$638 billion in the company’s market capitalization.

The decline follows analysts’ concerns about the potential impact of US tariffs on Apple, which relies heavily on China for production.

Under President Donald Trump’s trade policies, products from China face a 54% tariff. Although Apple also manufactures in India, Vietnam, and Thailand, these countries are similarly affected by increased tariffs.

Analysts suggest that Apple may need to increase prices or absorb the additional costs resulting from tariffs.

The company may also explore restructuring its supply chain to reduce dependence on regions with high tariffs. Apple has not yet commented on the situation regarding tariffs.

🔗 Source: CNBC

🧠 Food for thought

A. Apple’s China dependency creates greater vulnerability than for other tech giants

While most tech companies face tariff challenges, Apple’s remarkably high dependency on China creates unique exposure among its peers.

Apple manufactures approximately 85-90% of iPhones in China, both now subject to substantial tariffs, creating an immediate supply chain crisis1 2.

This manufacturing concentration is compounded by China representing roughly 18% of Apple’s total revenue, creating a double vulnerability, both production and sales market exposure3.

Apple’s attempts to diversify production to India and Vietnam now appear insufficient as Trump’s tariff plan unexpectedly includes these countries too, impacting Apple’s tariff avoidance strategy4 5.

The magnitude of Apple’s exposure explains why it lost nearly 19% of its value ($638 billion) in just three days—more than peers like Microsoft which faces less direct manufacturing exposure6 7.

This dependency presents a contrast to software-focused tech companies, which analysts note face significantly less tariff impact due to their digital delivery models and less reliance on physical manufacturing8.

B. Price increases vs. profit margin erosion presents an unavoidable dilemma

The economic reality facing Apple illustrates the classic tariff dilemma for multinational corporations—either raise prices and risk sales volume or absorb costs and damage profitability.