Apple is worth $1tn less than three months ago – why is it so hard-hit by Trump tariffs?

Apple was almost a $3.7 trillion company just three months ago – but Donald Trump’s tariffs have played a big part in the most valuable company on the planet seeing its valuation slashed by a trillion dollars.

On 2 January, a $243.85 share price gave a total market capitalisation of $3.69 trillion (?2.88 trillion) to the iPhone maker.

That share price has since cratered; general uncertainty around Donald Trump’s policies, the prospect of stagnant global growth, and later the reality of the tariffs have all seen equities around the globe sink.

Apple hasn’t been immune and in many ways has been harder hit than some; minutes after the US markets opened on Monday, it was apparent that it would continue to see its share price fall: a 5 per cent dip left the stock at $176 briefly, before clawing back ground above $180. Whichever way you look at it and whenever the real recovery starts, a quarter of the share price disintegrating or a 27 per cent reduction in market cap is a wild fall for a flagship organisation in the nation that those same tariff policies are designed to enrich.

So why has Apple been so impacted by the tariffs? And what can the company do, if anything, to mitigate them?

Apple makes much of its hardware in China, which has, of course, been central to tariffs applied by the US.

To try and navigate away from possible trade wars, Apple had already moved some production operations to India and Vietnam, but those nations also face 26 per cent and 46 per cent tariff rates, respectively.

“The escalation in tariffs is bad for US companies who buy goods from China, and vice versa, because their costs will go up. It’s also bad for the world in general as we now have a repeat of the heightened geopolitical tensions between the US and China, which dominated Trump’s first term in office,” said Dan Coatsworth, investment analyst at AJ Bell.

Apple were reported last year to be keen on investing even more in Vietnam, following more than $15bn of investment in the country, where it had more than 20 suppliers based as recently as 2022.

Regardless of tariff-related issues, Apple had seen a couple of concerning numbers arise in their January earnings report: iPhone sales fell by 11 per cent in China, their biggest market, and the company missed Wall Street revenue expectations for that particular product.

CEO Tim Cook was bullish regardless, and the share price did rise accordingly at the time, but Apple Intelligence has been a problematic theme for the company for a while, and slowing iPhone sales would be another real issue.

Now it might not just be that region, but the US providing cause for concern as well – tariffs could reasonably see the price of a new phone increase exponentially to well above $2,000, given the cost of importing parts and products.

Again, China’s response of reciprocal tariffs on US imports damages price points for items and could impact Apple’s bottom line.

“Apple and Tesla shares both slumped [last week] as they could be badly hit by the tit-for-tat tariffs between the US and China. While both companies can produce goods locally in China, key components are shipped in from the US, which makes them tariff-eligible. This situation compounds an existing problem where both Apple and Tesla are struggling to grow strongly in the face of fierce competition from Chinese rivals. The price of their products may now go up, further weakening their competitive position,” Mr Coatsworth explained.

There had been a brief question over whether some companies – US corporations, of course – might get specific carve-outs in the tariffs: exemptions, effectively, to enable them to continue business as usual.

That answer appears to be no, so far at least, with Apple needing to face the same new realities as other companies.

Despite Tim Cook seeming to have a cordial relationship with Donald Trump, and pledging only two months ago to invest half a trillion dollars in the US across the coming years, there is no political benefit right now to standing alongside the US president, as so many of those tech companies’ CEOs did on inauguration day.

Wedbush analyst Dan Ives commented immediately after the tariffs were announced by Yahoo Finance, suggesting it would take Apple three years and $30bn (?23bn) to switch just a tenth of its supply chain to the US from Asia.