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Why Apple Stock Fell 7% Last Week

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May. 15 2019, Published 11:23 a.m. ET

Apple stock fell after renewed trade tension between US and China

Apple (AAPL) stock has had a fantastic year with returns of over 35.5% until last week, when worries of the trade war came back to haunt the stock. Apple fell nearly 7% in the week ended May 10. President Trump increased tariffs on Chinese imports on Friday. While these tariffs didn’t hit any of Apple’s products directly, there is a chance the Trump administration could levy a tariff of 25% on $325 billion worth of Chinese imports that have not been on the radar yet.

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Apple’s revenue from the region has already been tanking

Apple’s revenue from the Greater China region has tanked in the previous two quarters, but the region still makes up around a sixth of the company’s total revenue.

Thus, if China strikes back, Apple’s products, which have been struggling in China, could have a steeper mountain to climb in the country where its iPhone already faces stiff competition from local rivals.

According to a note to investors by UBS, the iPhone’s performance in China improved drastically last month. Apple had slashed the prices on iPhones earlier this year in China to stimulate sales in the country.

However, the investment bank warned that the trade tensions between the two countries might dampen consumer confidence in China.

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