Apple Stock Risks Worst Day In 5 Years On Trump's 'Liberation Day' Tariffs: Retail Stays Bearish As Citi Gauges Margin Pressure

Apple, Inc. (AAPL) stock fell over 7% in Wednesday's after-hours trading after President Donald Trump announced across-the-board sweeping reciprocal tariffs.

If the after-hours losses last through Thursday's session, Apple's stock will incur its biggest one-day loss since September 2020.

Although Apple has been diversifying its supply chain recently, its contract manufacturers are still concentrated in China and Taiwan.

Trump's reciprocal tariffs, which are set to take effect on April 9, envisage new 34% tariffs on imports from China, on top of the 20% tariffs announced already. Goods from Taiwan will invite a levy of 32%.

Delving into the impact of tariffs on China, Citigroup analysts said Apple's reliance on China for 90% of its manufacturing would drag the company's gross margin by nine percentage points, The Fly reported.

Apple's gross margin for the December quarter was 46.9%, with the product gross margin at 39.3%.

On the earnings call for the December quarter, CFO Kevan Parekh guided second quarter's gross margins to 46.5% to 47.5%, according to the transcript available on Koyfin. 

When asked about the impact of Trump tariffs on its products and consumer demand in general, CEO Tim Cook had said, "We are monitoring the situation and don't have anything more to add than that."

Wedbush analyst Daniel Ives warned in a note that tech stocks will come under significant selling pressure as investors assess the tariff measures. However, he is hopeful there will be "off-ramps and major negotiations" over the coming months to mitigate the impact.

Economist Larry Summers said the 2%-3% drop in index futures amounted to $1.5 trillion in losses. The economist said the market had already discounted much of these, and therefore, a better estimate of the stock market losses is $4 trillion. 

On Stocktwits, retail sentiment toward the Apple stock remained 'bearish' (32/100) by late Wednesday, with negativity intensifying from a day ago.

The message volume improved, albeit to 'normal' levels.

AAPL sentiment and message volume, as of 11:26 pm, April 2 | Stocktwits

A bearish watcher said Apple will be a brand to avoid following the tariffs.

Another user suggested an extended sell-off.

After closing Wednesday slightly higher, Apple's stock fell over 7% to $207.91 in extended trading.

Shares of the iPhone maker are down more than 10% this year, not counting the after-hours plunge.

The stock hit an all-time intraday high of $260.10 on Dec. 24.

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