Tech Tariffed

Donald Trump has long admired William McKinley, the 25th President of the United States — a name that’s often overlooked in the American political landscape. However, for Trump, McKinley is more than a footnote in history. He’s a role model. The original “Tariff King” was a president who championed protectionist policies and wielded tariffs as tools of national power at the dawn of the 20th century.

But this admiration isn’t just historical nostalgia. It reveals a striking parallel.

McKinley’s rise was bankrolled by America’s industrial titans, orchestrated by Mark Hanna, a wealthy businessman and political strategist. Fast forward to 2025, and Trump’s second term feels eerily familiar.

At his second inaugural ceremony, the tech elites — Elon Musk, Mark Zuckerberg, Jeff Bezos, and others — flanked the president, closer than ever, both physically and ideologically. 

And yet, just months later, on April 2nd, when Trump unveiled reciprocal tariffs on nearly 60 countries – both friends and foes – those very moguls and their companies became the policy’s first and most prominent casualties.

After the announcement of reciprocal tariffs, Big Tech stocks took a sharp nosedive. The "Magnificent Seven" — Apple, Microsoft, Amazon, Alphabet, Meta, Tesla, and Nvidia — collectively lost nearly $1.8 trillion in market value within a single week.

But why did this happen?

In this issue of CrossDock, we break down why tariffs are bad for tech giants, how they directly affect their supply chains, and what the future looks like.

Let’s begin with what, until a week ago, was the most valuable company in the world.

Rotten Apple 

Apple stood atop the global corporate ladder with a staggering $3.55 trillion valuation, making it the most valuable company in the world. But a single policy change made that crown fall off. 

Following the Trump administration’s sweeping announcement of reciprocal tariffs, Apple’s stock took a sharp hit, plunging more than 16% within days. According to experts, this decrease has erased over $770 billion from Apple's market capitalization.

But why did tariffs on other countries affect Apple so much? 

To fully grasp the impact, we first need to take a closer look at the supply chain behind Apple’s crown jewel — the iPhone.

According to the company’s reports, in fiscal year 2024, the iPhone contributed nearly $201.2 billion to Apple’s total revenue of $391 billion, accounting for approximately 51.4% of the company's total net sales. Interestingly, most of the iPhones that Apple produces come from its Asian manufacturing units, especially from China. 

In the last two decades, Apple has heavily relied on the electronics manufacturing company Foxconn and China to convert its designs into products. Apple’s increased dependence on China stems from more factors than just a cheap workforce. 

For years, China offered an unmatched mix of precision engineering talent, deep manufacturing expertise, and a well-oiled supply chain ecosystem. 

It is exactly that kind of workforce density and specialization that allowed Apple to design in Cupertino and deliver millions of units worldwide.

But it wasn’t just talent. China’s dense supplier networks and direct access to critical raw materials — like lithium and cobalt — gave it a unique advantage in iPhone production. 

Interestingly, nearly 70% of the world’s rare earth processing happens in China, and the country dominates the global supply chain for components like lithium-ion batteries, essential for every iPhone. 

This special combination in China allowed Apple to source, assemble, and ship devices faster and more efficiently than anywhere else. At one point, according to Counterpoint Research, 85% of global iPhone Pro was produced from China’s Zhenzhou facility – dubbed the iPhone city.   

What seems strongest is often the most fragile — a phrase that perfectly captures what happened to Apple’s supply chain engine when COVID-19 hit.

At the start of 2020, Apple was on track for a record-breaking quarter. iPhones were flying off the shelves, China’s factories were operating at full throttle, and the company’s March numbers looked solid. Then, almost overnight, everything came to a standstill.

China — home to more than 90% of Apple’s manufacturing — imposed a strict COVID-19 lockdown. Output at critical plants, including Foxconn’s massive Zhengzhou facility, collapsed. Apple's finely tuned supply chain, often praised as one of the most efficient in the world, suddenly couldn’t keep up.

The impact was immediate. iPhone sales dropped 7% that quarter. Factories stopped working, and shipments were left in limbo. The disruption didn’t just slow the production, it exposed a more profound weakness in Apple’s strategy: a near-total dependence on China.

And if COVID-19 was the first blow to Apple’s supply chain, geopolitics delivered the second. During Donald Trump’s first term, the U.S.-China trade war and the subsequent increase of tariffs on Chinese imports made production costlier and riskier for Apple. 

For Apple, the message was now clear: relying on one country — however efficient — meant gambling with the future.

So, Apple began to look elsewhere. 

Enter Vietnam and India. 

According to a JP Morgan report, Apple initially aimed to shift 5% of global iPhone 14 production to India by late 2022, with plans to scale that up to 25% of all iPhone manufacturing by 2025. 

Fast forward to today, and India is playing a vital role in both the manufacturing and assembly of iPhones. As per Evercore ISI estimates, 10% to 15% of all iPhones worldwide are now assembled in India — marking a significant milestone in Apple’s efforts to diversify beyond China. According to reports, Apple’s iPhone shipments in India have crossed $10.7 billion in 2024.

The story is similar in Vietnam, where Apple has significantly ramped up production over the past few years. According to Evercore ISI, around 20% of global iPad production and a whopping 90% of Apple’s wearable product assembly, including the Apple Watch, now takes place in Vietnam, solidifying the country’s role as a crucial pillar in Apple’s supply chain strategy.

But, despite its growing footprint in India and Vietnam, Apple remains deeply reliant on China. According to a recent report from Evercore ISI, China still accounts for roughly 80% of Apple’s total production capacity, with around 90% of all iPhones still assembled there.

When Trump’s reciprocal tariffs went into effect, almost every single country that Apple depends on to manufacture its products was struck with tariffs. China faces a 125% tariff, Vietnam 46%, and India 26%. 

So what does this mean for average consumers? A rise in prices.

According to TechInsights, a 256 GB iPhone 16 that used to cost around $1,100 could increase anywhere between $1400 and $1600. This applies to all Apple products that are made outside the United States.

According to Morgan Stanley, the new tariffs on iPhones and other devices imported from China could add $8.5 billion to Apple’s annual costs. That hit would shave off about $0.52 per share, or roughly $7.85 billion from Apple’s profits next year.

So why not make iPhones in the US? 

In fact, Commerce Secretary Howard Lutnick echoes the same opinion. In his recent appearance on CBS News Face the Nation, he said, “The army of millions and millions of human beings screwing in little screws to make iPhones is coming back to America.”

But it is easier said than done. Experts say bringing iPhone manufacturing back to America would be costly and time-consuming. According to a Bloomberg report, relocating just 30% of Apple’s supply chain to America would take nearly three years and cost the company over $20 billion.

Even if Apple were to build out supply chains, train a domestic workforce, and establish manufacturing facilities for the iPhone in the U.S., the costs would likely far exceed the burden of the current tariffs. Reports say that the cost of an iPhone, if made in the US, can go as high as $3500. 

So what’s Apple doing to offset the tariff threats? 

According to reports from the leading Indian daily newspaper Times of India, to avoid the impact of fresh US tariffs, Apple shipped five planeloads of iPhones and other products from India to the United States over just three days. Additionally, the company is reportedly in talks with the administration for an exemption. It is worth noting that, in February, Apple pledged over $500 billion in US manufacturing.

But Apple isn’t the only one in the crosshairs. The world’s largest online marketplace is quietly facing a supply shock of its own.

The Everything Store

That’s largely because the world’s biggest online retailer depends heavily on goods made in China. According to Marketplace Pulse, Chinese sellers account for over 50% of all Amazon’s third-party sellers.

In 2024 alone, Amazon’s third-party seller services brought in $156.1 billion in revenue — a significant portion of which flowed through sellers based in China. 

And more than half of the top 20 cities with the highest number of Amazon sellers are located in China, with Shenzhen alone home to over 102,000 sellers generating a combined $35.3 billion in annual revenue. This highlights just how deeply integrated Chinese sellers are in Amazon’s global marketplace.

Furthermore, Amazon’s top-performing categories — electronics, home goods, and apparel — are heavily driven by Chinese sellers, who play a crucial role in fueling the platform’s revenue.

Take apparel, for instance, which contributes 10% to 15% of Amazon’s total revenue — a category dominated by Chinese sellers known for their vast inventories and highly competitive pricing.

“China-based sellers account for significant portions of our third-party seller services and advertising revenues, and China-based suppliers provide significant portions of our components and finished goods,” Amazon mentioned in its annual report. 

This means higher prices across the board for most products and fewer buyers willing to splurge. For Amazon, this will translate to lower sales and reduced revenue. Amazon must also rethink its business strategy for the newly launched Haul, similar to Shein and Temu, that offers ultra-cheap products sourced from China. 

To avoid the steep tariffs, according to Bloomberg, Amazon has canceled orders for multiple products made in China and other Asian countries.

But not everything is dark for Amazon. 

Alongside the sweeping tariffs, President Trump also announced plans to immediately close the de minimis loophole — a policy that Shein and Temu have long used to flood U.S. markets with cheap, direct-to-consumer goods from China. 

With that loophole gone, these fast-fashion giants must now compete on a level playing field with Amazon. And according to experts, Amazon’s unmatched speed, fulfillment infrastructure, and Prime delivery network give it a significant edge over these foreign challengers.

While Amazon sees a window of opportunity, for Tesla, it looks like all the doors are closed. 

Tesla Troubles 

Not long ago, Tesla was a Wall Street darling with sky-high valuations. But in 2025, all that changed.

The stock is down more than 38% this year, and Elon Musk is locked in a public feud with Trump’s trade team. 

And to make matters worse for Tesla, the latest round of tariffs on Chinese goods is poised to take a direct hit on its bottom line. 

Despite rising tensions between the US and China and close ties to President Trump, Elon Musk is going all in. In February — just a month into Trump’s second term — Tesla launched a $200 million battery plant right next to its Shanghai Gigafactory. 

Meta Problems 

Meta may not build iPhones like Apple, make cars like Tesla, or ship packages like Amazon, but it’s still taking a hit from the Trump tariffs — and the reasons are hiding in plain sight.

At first glance, Meta seems protected. It doesn't sell hardware at scale like Apple or Amazon. But its real business is advertising — and that’s exactly where the impact is. 

In 2024, Meta made $160.63 billion in ad revenue. Meta earns a massive chunk of its revenue by selling ads to small and mid-sized e-commerce brands, many of which rely on selling Chinese-made goods to U.S. consumers. With Trump’s new tariffs making those imports significantly more expensive, the ripple effect hits Meta’s clients first, and ad budgets are the first to go.

Add to that the loss of the de minimis exemption. That loophole was essential to their low-cost business model, and its closure means major Chinese advertisers on Meta’s platforms are suddenly pulling back. According to Meta’s own CFO, 10% of its 2023 revenue came from Chinese companies, with Shein and Temu among the biggest.

According to a CNBC report, Temu and Shein spent approximately $600 million and $200 million, respectively, on Facebook and Instagram advertising during Q3 2024. 

Data centers and AI

Trump’s tariff bombshell didn’t just rattle the immediate business of Big Techs; it sent shockwaves through the backbone of Big Tech’s next big bet: AI data centers.

From Meta to Amazon, tech giants have been pouring billions into building data centers to win the AI race. However, any tariffs on imports from China, Taiwan, and South Korea can drive up the cost of servers, components, and construction materials, making it significantly more expensive to scale data centers.

Analysts now say Trump’s tariffs could delay or derail grand-scale initiatives like Stargate, the $500 billion AI data center venture between OpenAI, Oracle, and SoftBank.

Microsoft announced its plan to cancel the $1 billion data center project in Ohio, citing escalating costs driven by tariffs.

 So, what about the chips that power the AI revolution?

Semiconductors are temporarily spared from tariffs. But the White House has signaled targeted chip tariffs — possibly 25% or higher — are coming next. That puts Nvidia, AMD, and Intel squarely in the crosshairs. And while Nvidia's chips are exempt for now, 100% of its GPUs are still made by TSMC in Taiwan, which is already under a 32% tariff. One tariff tweak, and AI's biggest enabler faces a cost crisis.

Tech in Crosshairs 

The repercussions of the tariffs on Big Tech aren’t just economic — they’re geopolitical.

Case in point: the European Union is contemplating countermeasures that could significantly impact major American technology companies. 

For example, French President Emmanuel Macron has indicated that Europe is preparing a multifaceted response, which may include retaliatory actions against U.S. digital services and the imposition of new tariffs on American goods. 

Sophie Primas, a spokesperson for the French government, stated that the EU's retaliation could encompass "digital services that are currently not taxed," potentially affecting companies such as Google, Amazon, Facebook, Apple, and Microsoft. 

Additionally, French Economy and Finance Minister Eric Lombard suggested that regulating the use of data by American tech firms could be a strategic response to the U.S. tariffs.

What’s Next

If there’s one thing markets hate more than bad news, it is uncertainty. And right now, tariffs have thrown Big Tech, Wall Street, and global supply chains into a fog of uncertainty.

Yes, the recent announcement of pausing tariffs has sent markets into the green, but it’s important to remember — it’s only a 90-day pause. For Big Tech, this window is a critical moment to reassess their next move and rework supply chains, especially those heavily dependent on China. With the potential for tariffs reaching up to 125%, finding alternative sourcing and manufacturing routes is no longer optional; it’s urgent.

This newsletter was written by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!