Apple on track for worst day since Covid hit
Apple tumbled in early trading, putting it on track for its worst day since the early days of the Covid crisis, as other tech hardware makers like Dell and HP are hit by some of the deepest drops in the market.
It makes sense. As a Morgan Stanley analyst wrote in a note published early Thursday morning, “reciprocal tariffs are calamitous to IT Hardware” companies, who rely on “extensive international manufacturing” to produce laptops, phones, and other devices that consumers purchase. Apple, for example, will face additional costs of more than $33 billion annually due to the tariffs, Morgan Stanley estimates. And the broad nature of Trump’s tariffs means even companies who’ve tried to diversify away from China will still get hit.
Morgan Stanley analysts wrote:
“Most hardware companies that diversified manufacturing away from China will now be subject to at least 25% import tariffs (and as high as 54%); and (2) this tariff cost will likely be passed entirely to the end-customer. In fact, we estimate that today’s tariff announcements would amount to a ~$50B incremental cost borne by either the manufacturer, the end-customer, or shared between both...
Unfortunately, Hardware companies have few mitigation tools at their disposal to offset these tariffs, and as a result conclude that reciprocal tariffs are likely to severely impact demand/margins, and accelerate the hardware downcycle from here.”
“Most hardware companies that diversified manufacturing away from China will now be subject to at least 25% import tariffs (and as high as 54%); and (2) this tariff cost will likely be passed entirely to the end-customer. In fact, we estimate that today’s tariff announcements would amount to a ~$50B incremental cost borne by either the manufacturer, the end-customer, or shared between both...
Unfortunately, Hardware companies have few mitigation tools at their disposal to offset these tariffs, and as a result conclude that reciprocal tariffs are likely to severely impact demand/margins, and accelerate the hardware downcycle from here.”
