Apple shares gained 1.8 percent Monday (Dec. 3) after the announcement of a trade cease-fire between the U.S. and China, according to a report by CNBC.
Other tech shares, including Nvidia and Micron, also gained on the first trading day after the announcement was made. Both countries agreed to pause tariffs for 90 days to facilitate more talks to resolve the issue.
The agreement said the United States would leave tariffs on Chinese products – $200 billion worth – at 10 percent, and not raise the rate to a threatened 25 percent.
Up to this point in the dispute between the two countries, iPhones have not been subject to the tariffs. However, the U.S. said it would expand the tariffs on all untouched Chinese exports, which would include the iPhone and other products in the same vein.
In fact, President Trump said the idea of a 10 percent tariff on iPhones and laptops was a specific option.
The tariff fears spooked the market and sent Apple shares tumbling by more than 20 percent since the beginning of October. The shares fell far enough to end Apple’s reign as the biggest tech company in the country. That title now belongs to Microsoft.
“Under this hypothetical ‘third round’ of tariffs, a majority of all U.S. hardware revenue today – including smartphones, laptops, servers, etc. – would become subject to a 10 percent import duty, due to the China-centric nature of modern tech hardware supply chains,” wrote Toni Sacconaghi, a Bernstein technology analyst. “Within our coverage, Apple and HPQ are most exposed; we estimate that such wide-ranging tariffs on Chinese exports to the U.S. would impact 28 percent of Apple’s revenues today, and 25 percent of HPQ’s revenues.”
On Friday (Nov. 30), trading closed with Microsoft valued at $851 billion and Apple at $847 billion, according to Forbes.