Apple (AAPL) Faces Supply Chain Challenges Amid Tariff Concerns

🗝️ Key Points

• Following the announcement of a "reciprocal tariff" plan by the U.S.
• (AAPL, Financial) has experienced significant stock declines over two consecutive trading days.
• With 90% of Apple's phones assembled in China, the company faces a tough decision: absorb the tariff costs or pass them on to consumers.According to Morgan Stanley, the tariffs could increase Apple's annual costs by approximately $8.5 billion.

Following the announcement of a “reciprocal tariff” plan by the U.S. President, Apple Inc. (AAPL, Financial) has experienced significant stock declines over two consecutive trading days. With 90% of Apple’s phones assembled in China, the company faces a tough decision: absorb the tariff costs or pass them on to consumers.

According to Morgan Stanley, the tariffs could increase Apple’s annual costs by approximately $8.5 billion. Analysts suggest that if Apple passes these costs to consumers, the retail price of the iPhone 16 Pro Max in the U.S. could rise from $1,599 to $2,300.

In response to previous tariff threats, Apple began diversifying its supply chain during the President’s first term. This included shifting some production to India and Vietnam and expanding production lines in Malaysia and Thailand. However, the potential imposition of high tariffs on Southeast Asian countries could severely impact Apple’s supply chain.

In February, Apple pledged to invest over $500 billion in the U.S. over four years, including new facilities in Texas and Arizona, to persuade the government to exclude its products from the tariff list. However, experts highlight the challenges of building new factories in the U.S., citing a lack of infrastructure and workforce.

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