Markets faced a turbulent morning following President Trump’s new tariff threats targeting Apple and the European Union. In a series of social media posts, the president outlined his plan to impose a 25% tariff on Apple unless the company relocates iPhone manufacturing to the United States. Additionally, he proposed a 50% tariff on all goods imported from the European Union, citing a lack of progress in trade negotiations. These announcements have injected uncertainty into the markets, causing significant volatility as investors react.
As trading opened, U.S. stock markets dropped sharply. The Dow Jones Industrial Average fell by 300 points, a decline of about 0.75%, while the S&P 500 and Nasdaq each dipped by approximately 1%. Futures, already trending downward prior to the opening bell, reflected investor anxiety over the potential escalation of trade tensions. Market watchers attribute these losses to fears of economic disruption stemming from the president’s tariff threats.
Apple’s stock saw an immediate decline of nearly 3% following the announcement. The company, which has long relied on manufacturing operations in China and more recently India, faces mounting pressure to comply with Trump’s demands. Analysts, however, suggest that relocating production to the United States is unrealistic. Dan Ives, a veteran tech analyst at Wedbush Securities, estimates that such a move would cost Apple $30 billion over three years. Moreover, this shift could result in iPhone prices soaring to $3,500—more than triple the current cost—a scenario that would likely deter consumers.
Industry experts note that manufacturing iPhones domestically would not only take 5 to 10 years to implement but would also face logistical and labor-related challenges. The high cost of U.S. labor and a shortage of skilled workers make this proposition economically unfeasible.
The president’s tariff threats extend beyond Apple to the European Union, with a proposed 50% tariff on EU goods as early as June 1. Trade experts warn that such measures could provoke retaliation from the EU, jeopardizing one of America’s largest trading relationships. In 2024, the U.S. imported over $600 billion in goods from the EU, including pharmaceuticals, automobiles, aircraft, and machinery. Disruptions to this trade flow could significantly increase costs for American businesses and consumers alike.
Mary Lovely, a trade specialist at the Peterson Institute, cautioned that these tariffs could backfire. “The EU considers itself a major global player and will not accept being treated like a minor entity,” she said, highlighting the risk of reciprocal actions that could impact U.S. jobs.
Despite private acknowledgment that tariffs on Apple could increase iPhone prices, the White House has not publicly addressed these concerns. Press Secretary Caroline Leavitt has refrained from commenting on the potential cost to consumers. Trump, meanwhile, remains firm in his position, frequently meeting with Apple CEO Tim Cook to push for greater domestic manufacturing investments.
Apple’s efforts to appease the administration include a $500 billion investment in U.S.-based projects. However, experts argue that this falls short of the president’s demands for relocating iPhone production. While these measures reflect Apple’s attempts to maintain a cooperative relationship with the administration, the threat of a 25% tariff adds significant pressure.
The latest tariff threats mark a renewed escalation in trade tensions under President Trump’s administration. While aimed at boosting domestic manufacturing, these measures could have far-reaching consequences for consumers and the broader economy. Markets will continue to monitor developments closely as the proposed tariffs loom, leaving businesses and investors grappling with heightened uncertainty.