Apple’s Falling Share Price Gets Saved

The feared $4,500 iPhone price was based on the Apple Inc. (NASDAQ: AAPL) smartphone being built outside China and with parts not made in China. iPhones had been built there for over a decade. The company could move production to India, but that would take years.

Trump’s 125% tariffs on Chinese imports threatened to jack up iPhone prices if production had to be moved to the United States. Last Friday, another new reversal was made on tariffs on electronic items imported from China, changing that math in Apple’s favor.

Apple stock surged almost 10% on the good news. (President Trump may change his mind again and put tariffs back on electronics made in China. So the optimism may be short-lived).

Before Trump decided to eliminate some consumer electronic tariffs on Friday, Apple’s shares had fallen 30% this year. Morgan Stanley had cut its target based on China import news and because the company’s AI product was weak.

The iPhone price challenge dropped Apple from the number one spot based on global market cap. Microsoft Corp. (NASDAQ: MSFT) recently took the crown. Apple has it back, but barely. Its market cap is $2.98 trillion, while Microsoft’s is $2.89 trillion.

Apple CEO Tim Cook quietly lobbied President Trump, and it has worked, at least for now.

The company’s success has been based on Chinese factories for years, and a large part of its revenue also comes from China. In the most recently reported quarter, its Greater China revenue was $18.5 billion, out of the global total of $123.4 billion. iPhone revenue for the same quarter was $69.1 billion. Apple cannot afford any erosion to iPhone revenue without its total top line being threatened.

President Trump’s China imports change of heart has given Apple a reprieve, but it may not last long.

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