Due to the imposition of reciprocal tariffs by the U.S., prominent American companies like Apple and Nike, which have large production facilities in China, Vietnam, and India, are expected to suffer significant damage. On December 2nd, U.S. President Donald Trump announced the imposition of high tariffs, ranging from 26% to 54%, on these key production centers in Asia. Following the announcement, the stock prices of these companies sharply declined.
The tariffs were announced after the New York stock market closed at 4 p.m., but Apple’s stock price plummeted about 7% in after-hours trading. This is primarily because Apple had adopted a strategy of expanding its production and supply chains in the tariff-affected countries. Since the first Trump administration imposed tariffs on China in 2018, Apple relocated its key product manufacturing, like iPads and AirPods, to Vietnam and shifted iPhone production to India. Previously, over 90% of iPhones were manufactured in China, but Apple continues to increase its production capacity in India, planning to produce about 25% of all iPhones there.
With the newly announced 34% tariff on China, combined with the existing 20% rate, the total tariff on Chinese imports is projected to reach 54%. The tariff rates for Vietnam and India are 46% and 27%, respectively. Investment bank Morgan Stanley predicts that Apple’s earnings might decrease by about 7% next year if tariffs on China proceed as scheduled.
Footwear and clothing manufacturers, heavily reliant on Vietnamese production, are also expected to be impacted. According to Bloomberg, Nike, which produces about 50% of its shoes in Vietnam, saw its stock drop 6.4% in after-hours trading. Sports apparel company Lululemon, with about 40% of its production in Vietnam, experienced a stock decline of over 10%.
Morgan Stanley also indicated that Amazon, which earns 25% of its total sales from China, is likely to face difficulties. The Financial Times (FT) reported that retail and third-party sellers, which account for over half of Amazon’s revenue, might pass the increased costs from tariffs on to consumers.
Additionally, over 95% of companies in the S&P 500 index saw their stock prices fall, according to market research firm FactSet. Dan Ives, an analyst at Wedbush Securities, described the tariffs on China as “jaw-dropping” and told the New York Times (NYT) that the announcement was worse than the worst-case scenario for Wall Street.