Investing

Rich Duprey

If you thought yesterday’s market action was wild, prepare for more of the same today. After President Trump imposed additional tariffs on China yesterday that brought the total import duties on the country up to 104%, China just retaliated with new tariffs of its own, hiking them an additional 50% for a total of 84% on American goods.

Beijing says it is willing to “fight to the end” in this trade war and it looks like markets are bracing for the worst. 

Dow Jones Industrial Average opened .24%, while futures for the S&P 500 and Nasdaq are up slightly at open. The Roundhill Magnificent Seven ETF (MAGS) is up 1.90% 

All of the Magnificent 7 stocks took it on the chin yesterday, but Apple (NASDAQ:AAPL) was the biggest loser, falling 5%, followed by Tesla (NASDAQ:TSLA) dropping 4.9% and Amazon (NASDAQ:AMZN) 2.6%.

So far, though, trading shows the tech stocks pretty much shrugging off the latest announcement with the entire group except Microsoft (NASDAQ:MSFT) moving higher in early trading. 

While Apple is obviously closely tied to the China trade, its stock swung from being down to moving up 3.11% heading into the morning bell. Tesla is up 4%, Amazon  is 2% higher, and Nvidia (NASDAQ:NVDA) is jumping 4%

Apple could have most to lose

Apple has been scrambling to shift manufacturing away from China as quickly as possible and The Wall Street Journal reported it would be moving as much manufacturing as it could to India. 

While India is also getting hit with new tariffs from Trump, at 27%, they are far more manageable than the doubling of rates China just got hit with. The iPhone, which makes up half of Apple’s revenue, is primarily sourced from China and the rising trade tensions that suddenly opened up into a “hot war” with tariffs has seen AAPL stock plummet. Shares are down 31% year-to-date, but they’ve lost 22% of their value in just the last week.

Trump said yesterday he thinks the iPhone can be wholly built in the U.S. because “we have the labor, we have the workforce, we have the resources” to do so. But such shifts can’t happen overnight and in fact take several years. Also, it would raise the cost of an iPhone due to the higher labor costs.

With China also imposing new export restrictions on rare earth minerals, manufacturing the iPhone domestically could become more difficult. Rare earth minerals are only a small fraction of the iPhone, but they play critical roles in its speakers, Taptic Engine, and color display. Apple, though, has moved to use 100% recycled rare earth elements in its smartphone.

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