The Trump administration's massive tariffs on China have Apple flying planes full of iPhones to the U.S. and consumers rushing to buy them before the prices potentially skyrocket.
Why it matters: The iPhone maker is one of many large companies caught up in an escalating trade war between the world's two biggest economies. Most iPhones are assembled in China, and more than half of iPhone sales are in the U.S.
Driving the news: China announced retaliatory tariffs of 84% on imports of U.S. goods on Wednesday after President Trump imposed a sweeping 104% tariff on Chinese goods, including clothes, shoes, toys and tech products.
- Trump later Wednesday announced he was increasing tariffs on China to 125% while pausing the sweeping reciprocal tariffs the U.S. imposed to other countries this week.
State of play: U.S. consumers are rushing to stores to buy iPhones in anticipation that the new tariffs will prompt Apple to raise prices.
- Some customers told the WSJ that they aren't waiting to see if iPhone costs increase, with one person stating that "the tariffs for sure pushed me out of the door."
- Since Trump's "liberation day" announcement, at least 10 flights carrying iPhones and other products have taken off from Chennai International Airport, according to a person familiar with the matter.
- Apple is also looking to ship more of its products to the U.S. from countries like India going forward to avoid the China tariffs, per WSJ.
Zoom in: Under the new tariffs on Chinese imports, the price of an iPhone 16 Pro Max 256 GB could rise $350, or 29%, lifting the price tag to $1,549, according to data from UBS Investment Research.
- And that was before Trump increased the China levy again on Wednesday.
What they're saying: Wedbush Securities analyst Dan Ives said in a research note Tuesday that the added levies could create a "Category 5 Price Storm" for personal electronics and other gadgets.
- These tariffs on China and other nations is the equivalent of "flipping a boat upside down in the ocean with no life rafts," he said.
- Apple did not immediately respond to a request for comment.
Between the lines: Apple's stock, along with much of the market, roared back Wednesday afternoon after Trump announced a pause on reciprocal tariffs for 90 days for every nation but China.
- During the tariff meltdown, the company had suffered its worst three-day rout since the aftermath of the dot-com bubble in 2001, seeing its market cap plummet by more than $500 billion.
Of note: Most iPhones are manufactured in China and they account for about half of Apple's revenue.
- Apple can turn to alternate iPhone suppliers like India and Vietnam but it would take time and investment before they could match China's huge output.
- The Trump administration has said Apple should shift iPhone manufacturing to the U.S., but Apple CEO Tim Cook has previously stressed that it's not possible to find skilled industrial labor in the U.S. on a scale anywhere near what China offers.
What to watch: Apple will report its second-quarter results on May 1, when executives are expected to discuss the effects of tariffs.
