Apple and other US tech groups hit as Trump targets suppliers
Donald Trump’s sweeping tariff regime threatens upheaval for the likes of Apple, Amazon and other US companies that rely heavily on manufacturing in China and other countries now targeted for extra levies.
The US president’s extra tariffs, due to come into effect within days, impose a universal 10 per cent levy on all countries. But they are much steeper for many of the Asian countries whose factories are deeply embedded in supply chains relied on by US multinationals.
The extent of new tariffs was “worse than the worst case” scenario that markets feared, wrote Wedbush analyst Daniel Ives.
China faces a “reciprocal” 34 per cent tariff, Trump said, on top of a 20 per cent tariff he has already imposed. Taiwan faces a reciprocal tariff of 32 per cent, although semiconductors, a geopolitically critical export, are exempt for now.
Vietnam and India — which have also become important production centres for the likes of Apple — face reciprocal tariffs of 46 per cent and 26 per cent, respectively.
The tech sector “will clearly be under major pressure on this announcement [over] worries about demand destruction, supply chains and especially the China and Taiwan piece of the tariffs”, Ives noted.
Technology companies were among the hardest hit in the initial market reaction, with contracts tracking the Nasdaq index down 4 per cent. Shares of Apple fell 7 per cent in after-hours trading on Wednesday, while Amazon slid about 6 per cent.
Daniel Newman, chief executive of The Futurum Group, described Trump’s move as a “rip the Band-Aid-off moment” for tech investors who have been jittery for weeks.
“You’re watching the market react and you’re going: the whole world has basically become completely dependent on us having this very accessible economy,” he said.
The escalation of Trump’s global trade war comes after top executives spent months courting the president in an effort to soften or gain exemptions from policies that could hit their bottom line.
Apple declined to comment on whether there was any prospect of it securing a carve-out from the new tariffs, as it managed to do during Trump’s first term. A White House spokesperson confirmed there were no exemptions for Apple in the president’s executive order.
Tim Cook, Apple’s chief executive, is walking a geopolitical tightrope, with the company’s supply chains tightly bound to China, where contract manufacturer Foxconn pumps out millions of iPhones each year. A $500bn spending plan announced in February was seen as an attempt to placate Trump.
Apple ships roughly 50mn iPhones to the US each year, with the vast majority made in China. The iPhone remains the company’s flagship product and accounts for more than half of its total revenue. Its Mac, iPad, wearables and fast-growing services business make up the rest.
Amazon has similarly engaged in a recent campaign to woo Trump, having faced the president’s ire during his first term. Company founder Jeff Bezos attended Trump’s swearing-in ceremony and has dined with him several times in recent months.
The Seattle-based conglomerate is dependent on Chinese imports to stock its warehouses, and about a quarter of its retail arm’s costs are tied to China, according to Morgan Stanley analysts.
Nvidia shares, meanwhile, shed more than 5 per cent after-hours. The chip giant relies on Taiwan Semiconductor Manufacturing Company to manufacture its cutting-edge artificial intelligence chips.
Nvidia, whose chief executive Jensen Huang similarly promised hundreds of billions of dollars in spending in the US over the next four years in an interview with the Financial Times last month, declined to comment.
Trump also confirmed that 25 per cent tariffs will be imposed on all foreign-made cars and parts at midnight, hitting the stocks of all US carmakers.
Shares in Tesla fell 8 per cent in after-hours trading as investors worried about the impact on its global supply chain, as well as the prospect of retaliatory tariffs on the world’s largest electric vehicle maker.
Last month Tesla warned that the cost of making cars would increase because “certain parts and components are difficult or impossible to source within the US” and American vehicles would become less competitive overseas.
Investors’ fears over the fallout were not confined to the tech sector. Shares in retailers and consumer brands also sank, with Walmart dropping 7 per cent, Target slipping more than 5 per cent and Nike down 7 per cent in after-hours trading on Wednesday.
The moves comes despite many large US retailers having already sought to diversify their supply chains after Trump placed steep tariffs on imports from China in his first term.
Suppliers to Home Depot, the largest home improvement chain, moved some production to south-east Asia, Mexico and the US, chief executive Ted Decker said last month.
Target has shifted production of clothing out of China and increasingly to Central American countries such as Guatemala and Honduras, chief commercial officer Rick Gomez said last month. Trump hit Guatemala and Honduras with 10 per cent tariff rates on Wednesday.
Target declined to comment.
“These newly announced tariffs — and the expected retaliatory tariffs on American businesses — risk destabilising the US economy, undermining the goals of bolstering domestic manufacturing and growth,” said Michael Hanson, senior executive vice-president at the Retail Industry Leaders Association, which counts Target as a member.
The new tariffs sparked an immediate push for special relief. The Consumer Brands Association, whose members include food manufacturers PepsiCo, Mondelez and Kraft Heinz, petitioned to exempt certain “critical ingredients” from the levies.
“We encourage President Trump and his trade advisers to fine-tune their approach and exempt key ingredients and inputs in order to protect manufacturing jobs and prevent unnecessary inflation at the grocery store,” the association said.
Additional reporting by Rafe Uddin, Hannah Murphy and Alex Rogers
