Over the weekend, US President Trump reignited the US trade war, with the Magnificent 7 company Apple Inc (NASDAQ: AAPL) coming under fire.
Trump threatened a 25% tariff against Apple if it did not comply with his request.
Previously, Trump had asked Apple to move iPhone production to the US. Trump said failure to comply would result in a new 25% tariff on the company.
Following the news, Apple shares fell more than 3% in pre-market trading. On the same day, Trump also threatened to impose a 50% tariff on the European Union.
The VIX volatility index, which measures market fear, surged more than 20%.
Apple is the second-largest listed company in the US. Therefore, any significant movement in the Magnificent 7 company's share price influences the trajectory of the wider US market. Accordingly, it also influences US-focused ASX exchange-traded funds (ETFs) such as the iShares S&P 500 AUD ETF (ASX: IVV) and the Betashares Nasdaq 100 ETF (ASX: NDQ).
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The post-Liberation Day rollercoaster
On 2 April, 'Liberation Day', Trump imposed sweeping tariffs on most countries. The baseline rate was 10%, but certain countries, such as China, were hit much harder.
Trump also targeted certain industries, including cars, steel, and aluminium not produced in the US.
Tariff-related news was not well received by investors, with the Nasdaq Composite Index (NASDAQ: .IXNC) entering a bear market, and the S&P 500 Index (SP: .INX) going close.
Since then, the market has rebounded, with the Nasdaq Composite and the S&P 500 down just 1% and 3% respectively for the year to date.
Driving this rebound has been a series of announcements from Trump, including agreeing to pauses and exemptions for certain sectors. He has also invited several countries to negotiate and reached a trade deal with the UK. Another impactful piece of news was the agreement with China to reduce reciprocal tariffs for 90 days.
Apple's dilemma
Last month, Apple announced plans to make most of its iPhones sold in the US in India by 2026.
This came after the US imposed 145% levies on Chinese goods. While the Magnificent 7 company has moved some of its production to other countries, the majority of its devices are still assembled in China.
Although conditions are constantly changing, Apple seemingly decided to take preemptive action.
President Trump has voiced his objection to Apple's intention to move manufacturing to India. This latest threat appears to encourage Apple to change its mind.
Back in 2016, during Trump's first administration, Apple successfully negotiated an exemption against tariffs. However, this time around, the Magnificent 7 giant mightn't be so lucky.
