All of Big Tech is feeling the heat from President Donald Trump’s latest tariffs and the escalating global trade war. But no company is in a tougher spot than Apple. The company’s stock is down 15.9% since the latest tariffs were announced on Wednesday.

The Apple iPhone 16 Plus during the first day of in-store sales at Apple’s Fifth Avenue store in New York.

Every company has its own unique set of risks stemming from the radical shift in U.S. policy, but Apple faces battles on several fronts. Indeed, the company has been flagging potential problems since early in Trump’s first term.

Like many companies, Apple outlines geopolitical risks in its annual report. In its 2017 edition, those warnings focused on war, terrorism, and global pandemics. But following the first round of Trump tariffs in 2018, trade disputes began to headline this section. In 2021, after President Joe Biden left most of the tariffs in place, Apple moved the warning to a place of greater prominence in its annual report. Geopolitics and trade now get the No. 2 spot under the company’s risk banner, right below “adverse economic conditions.”  

Given recent events, Apple’s warning is almost prophetic: “The Company has a large, global business with sales outside the U.S. representing a majority of the Company’s total net sales, and the Company believes that it generally benefits from growth in international trade.” 

In fact, 64% of Apple’s fiscal 2024 revenue came from outside the U.S., a fairly static figure over the last decade. In other words, the majority of Apple customers live in foreign countries that may now impose their own tariffs. Apple, arguably the greatest symbol of American innovation, is a clear target. 

Amid a trade war, Apple would have a choice between raising prices, accepting a lower gross margin, or some combination of the two.

This isn’t just about iPhones and Mac sales. Countries may also retaliate by taxing services, what’s known as a digital service tax. In 2024, the U.S. had a $1.2 trillion goods trade deficit, but that was offset by a services surplus of $295 billion, according to the U.S. Bureau of Economic Analysis. When someone in Japan makes an in-game purchase on an iPhone, that’s an export of services. When someone in Brazil scrolls Facebook, that’s an export. When someone in France searches with Google, that’s an export.

Digital service taxes already exist in several countries, but the rates tend to be in the range of 2% to 5%. The number of countries with such taxes could easily increase, as could the rates, given that Trump’s latest tariffs on goods now range from 10% to 50%.

A French government spokesperson has already floated the idea of a European Union digital service taxes on Apple, Alphabet, Amazon.com, Meta Platforms, and Microsoft.

These taxes would directly impact Apple’s services segment, the company’s second-largest unit, its fastest grower, and the home of a 74% gross margin. Apple again would be faced with a choice of raising prices on products such as iCloud and Apple Music or dealing with lower margins. 

Apple’s largest risk from a trade war may not even be quantifiable. A nationalist backlash across the world could lead to boycotts of leading U.S. brands. Apple, along with companies such as Nike, Coca-Cola, and McDonald’s, are likely to be at the top of the list. 

The current world order served Apple well. Its world-leading brand is worth some $489 billion, according to consulting firm Interbrand, with the next closest name being Microsoft, at $353 billion.

In its warning about geopolitical risks, Apple spends even more time on supply challenges—and for good reason: “Substantially all of the Company’s manufacturing is performed in whole or in part by outsourcing partners located primarily in China mainland, India, Japan, South Korea, Taiwan, and Vietnam. Restrictions on international trade, such as tariffs and other controls on imports or exports of goods, technology or data, can materially adversely affect the Company’s business and supply chain.”

The company offers an extra warning about what’s effectively its double-threat in China: “The impact can be particularly significant if these restrictive measures apply to countries and regions where the Company derives a significant portion of its revenues and/or has significant supply chain operations.” 

A large majority of Apple’s products are assembled in China, while “Greater China,” accounted for 17% of the company’s revenue in fiscal 2024.

Apple has been trying to reduce its China risk for years, but at Apple’s scale, it’s difficult to find a substitute for China’s workforce, especially in a short time frame. Apple has pushed some assembly to Vietnam, but the biggest part of Apple’s diversification plan is India, the only country that can come even close to replacing China’s supply chain and consumer base. 

The Indian online Apple Store opened in 2020, followed by new retail stores that began opening in 2023. CEO Tim Cook frequently calls out India during earnings calls. “As you know from past calls, I’m particularly keen on India. India set a December-quarter record, and we’re opening more stores there,” he said during Apple’s latest quarterly investor call. “I think there’s lots of upside there.”

The first iPhones rolled off Indian assembly lines in 2017. Apple now makes roughly one-in-seven iPhones there. But even that diversification strategy has been undermined by tariffs. Under the White House’s latest policy, products imported to the U.S. from India will be hit with at least a 26% levee. For Vietnam, it’s 46%. Apple has nowhere to hide—and neither do its shareholders.