Apple shares were down as much as 9 percent for the week on Friday (May 10) in response to the U.S.' escalating trade war with China.
The fall represents the tech giant's biggest weekly decline for 2019, with the company losing about $75 billion of its market value since Friday. Now, Apple has a market cap of a little less than $900 billion, putting it behind both Microsoft and Amazon.
Last week, it was revealed that the Trump administration was planning to impose trade tariffs on $200 billion in goods from China. Apple's profits are believed to be vulnerable because of its reliance on China for production and sales, with the country generating almost 20 percent of its revenue last year.
As a result, Morgan Stanley estimated that, in a worst-case scenario, Apple could see its earnings drop by nearly a quarter ($3 per share) due to the tariffs. Rosenblatt Securities Analyst Jun Zhang said the duties would lead to price increases for Apple’s Airpod, charging dock, Apple Watch and other products.
"We do not know yet if the retail price of the iPhone will increase in the U.S. However, we see the tariffs impacting Apple’s MacBook component costs,'' Zhang wrote in a research note, according to Bloomberg.
While President Trump has boasted that his trade tariffs imposed on China and other countries have made billions of dollars for the U.S., the reality is that no foreign country has actually paid for any of it. In January, it was reported that more than $13 billion in duties were assessed on imported goods, as of Dec. 18.
Yet, while Trump has suggested that China and other countries are footing the bill, U.S. businesses and consumers could pay the biggest price for these tariffs due to higher costs.
Johns Hopkins University Applied Economics Professor Steve Hanke, a member of the Council of Economic Advisers under President Ronald Reagan, tweeted at the time: “Tariffs on Chinese imports are paid by Americans, not by the Chinese or their government. The president’s tariffs are simply a #tax on American consumers.”