Key points:
- Apple shares rally on good news
- US-China tariffs lowered for 90 days
- Tim Cook’s headaches back in full swing
US-China trade truce sparked hopes that the iPhone maker’s troubles might be over. But the company already kicked off a long and costly effort to move manufacturing out of China.
📢 Apple Soars on Tariff News
- Apple stock
AAPL was among the biggest winners on Monday when Donald Trump announced his administration has agreed on a 90-day tariff truce with China. Investors rushed to load up on Apple shares due to the tech titan’s deep dependence on China. - Shares of the iPhone maker rose a whopping 6.1% to close at $210.79 a pop, leading the Magnificent Seven rally. In the long run, that’s not too impressive as the stock is down more than 13% year to date. Why’s that? China troubles — tariffs and all that.
- Apple makes around 90% of its iPhones in China. And when that’s your biggest revenue driver, responsible for about half of your quarterly revenue, you need to move fast to avoid any potential supply chain disruptions.
👀 Tariffs Are High, Tariffs Are Low
- When Trump announced on April 2 that China will be paying tariffs as high as 145%, investors dumped Apple stock because suddenly the company was facing a mountain of costs to cover for its imports.
- Apple CEO Tim Cook was swift to act and he said in the earnings call on May 1 that he is looking at India as the place to manufacture the majority of its iPhones sold in the US.
💫 Complex as It Gets
- But the tariffs on Chinese imports are back to low double digits — at 30% for the next 90 days, down from 145% — and Cook’s headaches just entered a new phase. Until Trump and his administration finally settle on a mutually accepted tariff rate with China, Apple’s back-and-forth, zig-and-zag motions might keep investors on edge.
- Trump, in the meantime, appears confident that Apple could actually move its manufacturing into the US. “I spoke to Tim Cook this morning and he’s going to, I think even up his numbers — $500 billion — he’s going to be building a lot of plants in the United States for Apple,” Trump said at a news conference on Monday.
