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Local markets react to tariff threats
Even the biggest companies aren’t immune to trade war jitters. Apple and Tesla stock took a hit Monday amidst President Trump’s tariff threats against Canada and Mexico. This came as a shock to the market, sending ripples throughout the tech sector.
While markets recovered somewhat after Trump temporarily eased tariffs on our North American neighbors, Tesla’s stock remained stagnant. Other automakers rebounded more strongly, highlighting Tesla’s vulnerability.
Tesla felt the pressure
Tesla experienced the largest drop among the top seven biggest U.S. companies. A proposed 25% tariff on Canadian and Mexican imports would deeply impact automakers due to complex, cross-border supply chains. Parts often cross borders multiple times before becoming finished products.
Tesla’s CFO acknowledged the company’s efforts to source parts locally, but admitted reliance on global suppliers. He warned of the potential impact of tariffs on profits.
This is despite CEO Elon Musk’s support of Trump and his involvement in government cost-cutting efforts. Musk has previously expressed his disapproval of tariffs that restrict free trade.
Apple shows resilience
Apple’s stock also dipped, though analysts believe the impact of a 10% tariff on Chinese goods would be minimal. Even without the iPhone exemption granted during previous trade disputes, analysts predict a negligible impact on earnings.
Analysts estimate that Apple can source 80% of its U.S. products outside of China. With iPhone production capabilities in India, the company could shift production and continue supplying the U.S. market if tariffs persist.
Neither Tesla nor Apple offered comment on the situation.