Apple’s (AAPL) stock rose more than 1% in premarket trading on Wednesday after the a 104% levy on Chinese imports into the US took effect.

President Trump had said he would apply a 34% tariff on top of an existing 20% tax on Chinese goods during his “Liberation Day” press event on April 2, bringing the total tariff to 54%. In a post on Truth Social on Monday, Trump said he would add an additional 50% tariff on April 9 if China didn’t withdraw its 34% tax by Tuesday.

Apple (AAPL) shares took a hit after Trump’s initial 54% tariff, as Wall Street weighed how the company would cope. Although there was a brief rebound Tuesday morning, concerns returned swiftly in the afternoon. The stock opened at $186.73 and climbed to $190.34, but selling pressure resumed following the tariff announcement and a broader market sell-off. Apple closed down 4.98% on Tuesday.

Apple builds the majority of its iPhones in China, despite an effort to move more manufacturing to India. Trump has also placed a 26% tariff on goods from that country as well.

Baird Equity Research analyst William Power was already projecting the potential for Apple’s gross margins to drop from 46.8% to 44.4% in 2025 and to 41.6% in 2026 under Trump’s prior tariff plan, and the additional levy is bound to have a greater impact.

It’s unclear how Apple will deal with the increase. The company won an exemption from tariffs during Trump’s first term, but there’s no guarantee it will be successful this time around.

During a press briefing on Tuesday, White House press secretary Karoline Leavitt said Trump “believes we have the labor, we have the workforce, we have the resources” to bring iPhone manufacturing to the US.

But, according to Wedbush’s Dan Ives, doing so would take years and cause iPhone prices to skyrocket.

“The reality is it would take 3 years and $30 billion in our estimation to move even 10% of [Apple’s] supply chain from Asia to the US with major disruption in the process,” Ives wrote in an April 3 investor note.

Read more: What Trump’s tariffs mean for the economy and your wallet

“If consumers want a $3,500 iPhone we should make them in New Jersey or Texas or another state … The concept of making iPhones in the US is a non-starter in our view at $1,000. Price points would move up so dramatically it’s hard to comprehend and the near-term margin impact on Apple’s gross margins during this tariff war could be mind boggling for this US tech stalwart.”

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.