What Happened?
Shares of iPhone and iPad maker Apple (NASDAQ: AAPL) jumped 5.1% in the afternoon session after the major indices popped (Nasdaq +3.4%, S&P 500 +2.5%) in response to the positive outcome of U.S.-China trade negotiations, as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions. This rollback cuts U.S. tariffs on Chinese goods to 30% and Chinese tariffs on U.S. imports to 10%, giving companies breathing room to reset inventories and supply chains.
However, President Trump clarified that tariffs could go "substantially higher" if a full deal with China wasn't reached during the 90-day pause, but not all the way back to the previous levels.
Still, the agreement has cooled fears of a prolonged trade war, helping stabilize expectations for global growth and trade flows and fueling renewed optimism.
The optimism appeared concentrated in key trade-sensitive sectors, particularly technology, retail, and industrials, as lower tariffs reduce cost pressures and restore cross-border demand.
Separately, the Wall Street Journal reported that the new generation of iPhones could be more expensive. The next set of iPhones, the iPhone 17 series, is expected to be released in September 2025. Apple announced earlier that trade tariffs could cost up to $900 million. So, raising prices could be part of efforts to keep margins in check. Though, it remained unclear if a price hike would help the company make up any shortfall to its margins or lead to reduced sales as customers opt for cheaper and older models or look to competitors.
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What The Market Is Telling Us
Apple’s shares are extremely volatile and have had 32 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about a month ago when the stock dropped 9.1% on the news that President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10%.
Apple stood out as especially vulnerable due to its entrenched reliance on production in Asia, especially its China operations. The reciprocal tariffs pushed effective rates on all Chinese imports above 50%. With many of its manufacturing hubs now subject to elevated tariff burdens, Apple faced fresh challenges. Shifting production isn't something you do over the weekend. It takes years and a ton of cash, and even then, there could be more unexpected challenges. This could include factory buildouts, retraining workers, and moving equipment, which could quickly become a logistical headache.
Apple is down 14% since the beginning of the year, and at $209.66 per share, it is trading 19.1% below its 52-week high of $259.02 from December 2024. Investors who bought $1,000 worth of Apple’s shares 5 years ago would now be looking at an investment worth $2,693.
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