President Donald Trump’s 10% tariffs on goods made in China take effect Tuesday, putting electronics ranging from PCs to smartphones in the crosshairs. Trump has also signaled that he is considering tariffs on chips and products associated with chips, which could put further pressure on the tech industry.
The tariffs on Chinese-made goods are part of a package Trump has put into place on China, Canada, and Mexico. On Monday, Trump said he was pausing tariffs on Mexico for a month after productive talks with Mexican President Claudia Sheinbaum.
Read more: The latest news and updates as Trump’s tariff deadline approaches
The tech industry depends on manufacturing facilities in China to build the electronics Americans rely on. It’s up to each company to determine how it will respond to the 10% tariff. While some might be able to absorb the impact, paying for it themselves, others will have to pass the cost on to their customers, driving up the prices of consumer and enterprise products.
And if Trump decides to enact tariffs on chips, those goods could end up costing even more money at a time when consumers are still grappling with inflation.
“It’s going to have a pretty significant impact,” John Vinh, KeyBanc Capital Markets equity research analyst, told Yahoo Finance in a live interview. “As those prices increase, we think there’s probably going to be a negative impact to end demand. And ultimately that’s going to flow upstream to all the chip companies.”
Shares of chip stocks including Nvidia (NVDA), AMD (AMD), and Intel (INTC) were broadly down in late-afternoon trading Monday.
Apple (AAPL) is perhaps the tech company most at risk from Trump’s initial round of tariffs on China. The company has a massive manufacturing base in the country, which means everything from the iPhone and iPad to the MacBook Pro is facing 10% tariffs.
Add 10% to a base iPhone 16 Pro, which costs $999, and you’re looking at an increase of $99. Slap an extra 10% on the cost of a $1,599 MacBook Pro, and consumers will be on the hook for an extra $159. Apple could always swallow all or part of the 10% tariff, but that will dent profit margins.
According to BofA Global Research analyst Wamsi Mohan, Apple could be forced to rely on manufacturing facilities in other countries to avoid the majority of the tariff impacts. Mohan estimates that if Apple can source 80% of products from outside of China, the company will only face a $0.05 impact on earnings.
But if it can only source 50% of its devices, that number rises to between $0.07 and $0.12 depending on whether Apple raises prices.
