Supply chain diversification strategy will be severely affected by the tariff war, causing the market value of this giant to evaporate over 300 billion US dollars overnight.

In recent years, Apple Inc. (AAPL.US) has actively promoted diversification of its supply chain, transferring some iPhone production to India, AirPods production to Vietnam, and assembling Mac desktop computers in Malaysia. This move aims to reduce dependence on Chinese manufacturing in response to the early tariff policies of the Trump administration, supply chain crises caused by the COVID-19 pandemic, and risks brought about by chip shortages. However, President Trump's announcement this week of "reciprocal tariffs" has dealt a severe blow to Apple Inc.'s strategy. With Apple Inc.'s secondary production bases also included in the tariff range, the company's stock price plummeted over 9% on Thursday, far exceeding the 6% drop in the Nasdaq index. This single-day drop is not only Apple Inc.'s worst since March 2020, but also caused its market value to shrink by over $300 billion. Morgan Stanley analyst Erik Woodring stated, "Looking at Apple Inc.'s supply chain layout, Vietnam, India, and Thailand are now subject to reciprocal tariffs, meaning it has almost nowhere to escape." Woodring estimates that in order to offset tariff costs, Apple Inc. may need to increase prices on all products in the U.S. market by 17% to 18%. However, it is still unknown whether Apple Inc. will directly pass on the cost. "In the current situation, we must consider the worst-case scenario," Woodring said. "Under the political situation at GEO Group Inc, all parties involved seem to be taking a hard-line stance, with no signs of concession." In response to the tariff impact, Apple Inc. has not yet made a public statement. The Trump administration has expressed hope that this will drive manufacturing back to the U.S., specifically mentioning Apple Inc. in the tariff announcement, stating "they will be building plants in the U.S." However, currently, the only products Apple Inc. manufactures in the U.S. are the high-end Mac Pro desktop computers, with the main production and final assembly still reliant on overseas facilities. According to Apple Inc.'s financial reports submitted in November of last year, "almost all" of its manufacturing operations are conducted in China, India, Japan, South Korea, Taiwan, and Vietnam, none of which are exempt from Trump's new tariffs. In the report, Apple Inc. warned investors that tariffs may harm its business, potentially leading to price increases and even forcing the company to stop selling certain products. In his speech on Wednesday, Trump mentioned Apple Inc.'s $500 billion investment in the U.S., which includes chip and component procurement, but did not commit to mass-producing its main products in the U.S. Apple Inc. has long been reserved about "Made in the USA." As early as 2011, the late Apple Inc. co-founder Steve Jobs bluntly told then-President Obama, "Those jobs are not coming back to America." Wedbush analyst Dan Ives stated that if Apple Inc. were to move 10% of its supply chain from Asia to the U.S., it would require three years and a $300 billion investment, causing serious disruptions to production operations. In his analysis report on Thursday, he wrote, "The reality is that the cost and time of such a move are far beyond reasonable limits." As tariff policies are implemented, analysts are reevaluating Apple Inc.'s profitability. Earlier this year, some institutions predicted that Apple Inc.'s earnings per share would be minimally affected under the new trade policies, mainly based on Apple Inc.'s ability to bypass Chinese tariffs through secondary production bases. However, with Vietnam, India, and other locations now subject to tariffs, this assumption has been completely overturned. Analysts are remodelling to balance the impact of potential price hikes Apple Inc. may implement with the additional costs it may incur. In his report on Thursday, CFRA Research analyst Angelo Zino pointed out, "There is no doubt that if tariff policy continues, Apple Inc.'s profit margin and earnings expectations will face downward pressure."