Apple Shares Surge as U.S.-China Trade Tensions Decrease
Shares of consumer tech giant Apple (NASDAQ: AAPL) rose over 5% as of 11:51 a.m. ET, following announcements from U.S. and Chinese officials regarding a 90-day pause on high tariff rates. This development sets the stage for a potential broader trade agreement. Concurrently, the Dow Jones Industrial Average (DJINDICES: ^DJI) climbed over 860 points, while the tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) increased by about 3.4%.
Apple’s Advantage in Trade De-escalation
Among large tech companies, Apple stands to gain significantly from a reduction in trade tensions between the U.S. and China, as it produces approximately 90% of its iPhones in China. Moving operations out of China poses a daunting financial challenge for Apple, which has invested heavily in infrastructure there and employs 14,000 people directly, along with many others through its supply chain.
Wedbush analyst Dan Ives previously estimated that relocating about 10% of production to the U.S. could cost Apple upwards of $30 billion over three years. Moreover, the Trump administration had temporarily exempted consumer electronics like smartphones from Chinese tariffs in April.
Despite these developments, Apple CEO Tim Cook indicated that the company expects to incur a $900 million loss due to tariffs in the current quarter. Reports have also emerged suggesting that Apple is considering a price increase for iPhones, although this increase may not be directly tied to the tariffs.
Prospects as Trade Issues Fade
With the severe U.S.-China trade tensions now appearing to ease, Apple’s outlook seems brighter. Cook maintains regular communication with President Trump, which could help the company circumvent overly harsh tariffs, positively impacting its stock.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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