Apple shares surged on Monday after the U.S. and China reached a trade ceasefire, just as concern was ratcheting up that the iPhone maker would be next to be entangled in the trade dispute.
Apple jumped 3 percent in premarket trading after President Donald Trump and Chinese President Xi Jinping agreed to hold off on additional tariffs on each other's goods at the start of the new year to allow for talks to continue for 90 days. The U.S. agreed to leave tariffs on more than $200 billion worth of Chinese products at 10 percent, instead of raising the rate to 25 percent, which was threatened.
So far iPhones have been exempt from current tariffs, but the U.S. has threatened to apply the taxes on the rest of Chinese exports to the U.S., which would include the iPhone and other tech products.
President Trump specifically raised the option of a 10 percent tariff on iPhones and latops in an interview with The Wall Street Journal last week.
"Under this hypothetical 'third round' of tariffs, a majority of all U.S. hardware revenue today – including smartphones, laptops, servers, etc. – would become subject to a 10 percent import duty, due to the China-centric nature of modern tech hardware supply chains," wrote Toni Sacconaghi, Bernstein technology analyst. "Within our coverage, Apple and HPQ are most exposed; we estimate that such wide-ranging tariffs on Chinese exports to the U.S. would impact 28 percent of Apple's revenues today, and 25 percent of HPQ's revenues."
Fears of tariffs have helped send Apple shares lower by more than 20 percent since the start of October, causing it last week to lose its crown as the largest company by market value to Microsoft.
Chipmakers including Nvidia and Micron also jumped in premarket trading Monday on relief from the pause in the trade war. Nasdaq-100 futures jumped more than 2 percent in early trading.
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