On Monday, the stock prices of several China-listed Apple suppliers experienced a dip. This was largely seen as a response to US President Donald Trump’s threat of possible tariffs on imported iPhones. Luxshare, a company that handles iPhone assembly and AirPod manufacturing, saw its shares drop 2.2%. Lens Tech, a Chinese mobile screen maker, also experienced a 1.8% decline in share value.
This fall in stock prices was not limited to these two companies. Goertek, another supplier known for making AirPods, also witnessed a 1.1% drop in their shares. The shifts in these share prices align with the timing of President Trump’s threats about escalating his trade war.
Trump issued a warning on Friday, suggesting that he was ready to heighten the stakes of the trade war once more. Notably, he warned about the possibility of placing a 25% tariff on any iPhones that were sold, but not manufactured, within the United States. This specific threat is seen as Trump’s way of promoting the reshoring of jobs within America.
Along with this threat, Trump also signaled his intention to push for a 50% tariff starting from June 1. This development has caused a wave of concern about the potential intensification of an ongoing trade war with the United States, which many hoped was de-escalating after weeks of relative calm.
Earlier in April, the Trump administration had announced a bevy of punishing tariffs targeted against nearly all countries across the globe. This move triggered a massive sell-off of US assets which included government bonds and the US dollar, causing the White House to pump the brakes on most of these tariffs.
However, Trump decided to keep in play a baseline tax of 10% on most imports. Furthermore, he made refinements to his massive 145% tax on Chinese goods, ultimately lowering it to 30%. The continuing presence of these tariffs foreshadows potential challenges for many companies involved in overseas manufacturing.
Among those companies grappling with the uncertainties of these tariff threats is Apple. In response to the threat of tariffs affecting their products from China, Apple is fast-tracking its plans to move a larger proportion of iPhone production to factories in India by the end of 2026.
Trump’s threat of a 25% tariff on iPhones not assembled in America has added significant urgency to these plans. However, the implementation of such plans is challenging and requires technology and infrastructure that are not currently available for Apple’s manufacturing processes.
Nevertheless, despite ongoing attempts over the years to diminish its reliance on Chinese manufacturing, Apple still finds itself in a vulnerable position. As many as 85% of iPhones are still being built within Chinese factories, which could potentially subject the company to severe impact from future tariff changes.
While the ongoing threats of tariffs have created a challenging landscape, Apple has been making significant headway in diversifying its production base. Notably, Apple has moved 50% of its US-sold iPhone production to India. On top of this, it is also supporting Foxconn’s plans to establish a new factory in India at an investment of US$1.5 billion.
These efforts to diversify production, while significant, are still not quite robust enough to completely shield Apple from the potential implications of the pending tariff threats. This is especially the case when the specifics of these tariff threats state a preference for US manufacturing, as opposed to simply encouraging non-Chinese production.