Apple stock sinks 4% on Trump tariffs, but Mexico receives one-month reprieve

Apple (AAPL) stock appears to be the top loser from US tariff announcements on Monday with the consumer electronics purveyor sinking 4% late in the week’s opening session.

US stock markets plunged at the open on Monday as US President Donald Trump’s tariffs on Canada and China are set to take effect on Tuesday. However, the Trump administration backtracked on Mexico mid-morning, choosing to pause Mexican tariffs for a month after Mexican President Claudia Sheinbaum agreed to post 10,000 troops to the US-Mexico border to fight drug smuggling. 

This helped the Dow Jones Industrial Average (DJIA) reduce its initial 1% slump to about 15 basis points of downside. The NASDAQ’s initial 2% slide reduced to a 1% pullback.

Apple stock news

Apple stock slid more than 4% to $226 on Monday as Canada responded to the US’ 25% tariffs on Canadian goods set to take effect on Tuesday. Canada said it would also respond with 25% tariffs on US goods, which would likely have a negative impact on Apple sales. The Canadian tariffs are expected to affect $155 billion worth of annual trade with US companies. 

Canada and Mexico are the US’ two largest trading partners, and many observers worry that if the tariffs aren’t dropped quickly, they could lead to a recession as trade diminishes. 

Former Canadian finance minister Chrystia Freeland, who is running to replace Canadian Prime Minister Justin Trudeau, has said Canada should raise the tariffs to hit $200 billion of US goods and place a 100% tariff on Tesla (TSLA) vehicles. Tesla CEO Elon Musk was Trump’s largest individual donor in the recent election and has taken an ad-hoc leadership role in his new administration.

The quick pause in tariffs on Mexico is welcomed by investors, seeing as Trump appears open to cutting a deal that may forestall foreign retaliation. The government in China so far has not responded officially to Trump’s additional 10% tariffs on Chinese goods, other than to say it will challenge the tariffs through the World Trade Organization. As Apple produces a number of its products in China, these will also likely have a negative impact on Apple sales in the US.

Bank of America Securities said in a client note that Apple could shift iPhone production to India, effectively limiting the fallout from China tariffs. 

"Most iPhone models can now be manufactured in India," said Bank of America Securities analyst Wamsi Mohan. "As the new tariff is imposed on imports from China, Apple could have its manufacturing partners ramp up production in India and ship to the US. This could also be done for other Apple products that are manufactured in countries including Vietnam, Malaysia, etc."

Mohan and company also pointed out that Apple has in the past earned a pass to circumvent tariffs that apply to other US companies, so the tariff's actual effect is yet to be seen. If Apple doesn’t change course by moving as much as 80% of Chinese iPhone production to other countries, Bank of America Securities estimates that it could result in a $0.05 hit to earnings per share. However, they figure Apple would just make up the difference by raising iPhone prices in the US by 3%.

Apple stock forecast

Apple stock was already trading below the 50-day Simple Moving Average (SMA) since January 10, which was already likely a consequence of Trump's rhetoric about imposing tariffs. Monday's plunge means that the 200-day SMA is now viewed as support.

Sitting near $220 at present, the 200-day SMA hasn't been tested since May 2024, about nine months ago. The $220 level is also key for traders since it held up as support on November 5, 2024, and again two weeks ago on January 21 and 22 of this year. Any break below $220 will send traders scrambling since the next real support comes at $196. That level halted the downside during the August 5, 2024 market massacre and also acted as momentary resistance in June 2024.

To put an end to the negative sentiment, AAPL stock needs to retake $237. That level proved to be tough resistance in both July and October of last year.

AAPL daily stock chart