Apple Market Cap Drops $635 Billion

Apple Inc. (NASDAQ: AAPL) stock price was $202 on April 2. It has dropped to $180 since then, reducing the company’s market cap by $635 billion. It remains the world’s most valuable company, with a market cap of $2.72 trillion, just ahead of Microsoft’s $2.60 trillion.

The primary reason for the decline in Apple’s share price is that so many of its components and completed products come from China. Tariffs on Chinese imports are currently at 34%, and President Trump has threatened to increase them by another 50%.

Apple cannot quickly lower the effect of China’s tariffs. It makes about 90% of its iPhones there. Rosenblatt Securities recently forecast that the cost of making an iPhone could rise by 43%. The price of an iPhone sold in the United States would increase to $2,300. That would lower demand in the United States, and probably sharply. China is also the primary source of finished Macs and iPads.

Chinese tariffs would create carnage that would deeply wound Apple’s financials. In the most recent quarter, Apple’s revenue was $124 billion, of which $69.1 billion came from iPhone sales. Apple has hoped it would turn itself into a software and services company. However, in the most recent quarter, “Services” revenue was only $26.3 billion.

iPhone 16 sales are already lackluster. They are particularly challenged in China, the world’s largest smartphone market, with 1 billion smartphone owners. In the United States, that figure is closer to 200 million. Apple faces competition from several local manufacturers in China. Apple has also been slow to market with its new AI features and has said they will not be launched until 2026.

One answer to the Chinese tariffs is to manufacture more iPhones in India. The tariff on imports from India is 26%. However, Bank of America analyst Wamsi Mohan believes that Indian production is insufficient to replace China. TechCrunch, “He said that if Apple decided to import all 25 million iPhones to the U.S., it would satisfy about 50% of the demand in the U.S. market.”

Unless the trade war between China and the United States ends, or there is a low-tariff solution, Apple’s bottom line is at significant risk, and so is its stock price.

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