This morning, President Trump threatened China with an additional 50% tariff if the country did not pull back the 34% reciprocal tariff it placed on U.S. imports into the country. The reaction on Wall Street was a huge decline in seconds. The 30-stock Dow Industrial Average, already down 500 points at the time, dropped another 300 points in seconds and Apple’s shares, which had recovered from their early morning lows, plunged another $8 in seconds.
If Trump follows through on his threat, the 104% tariff on China could send the most expensive iPhone toward the $3,000 mark. Of course, Apple could decide to eat all of the additional tax and keep prices the same, but such a drop in its profit margins could decimate the stock. Apple today opened at $177.24, hit a bottom of $174.62, rebounded to as high as $194.14 and at 2:06 pm EDT is trading at $180.73.
Trump’s plan is to force U.S. trading partners to negotiate trade deals with the U.S. that would remove tariffs from both sides and end what the president sees as unfair trading restrictions on U.S. goods. The question is whether these deals can be reached before the tariffs create economic issues that will lead to a recession or a depression.
