This Tweet from President Trump is the Reason Why Apple Shares Fell

Shares of iPhone maker Apple took a tumble on Monday after Wall Street learned that President Trump is pressuring the company to manufacture its products in the U.S.

Trump tweeted over the weekend that Apple should manufacture its products in the U.S. in order to avoid proposed tariffs on Chinese goods that his administration wants to carry out.

According to Bank of America Merrill Lynch, Apple may respond to the pressure from Trump by asking its partners to bring some iPhone assembly operations into the U.S. The firm has also predicted that if this were to happen, it would mean higher iPhone prices.

The bank said that a 25 percent tariff “could be materially demand destructive” and estimates that about a third of the $26 billion it earns from those products comes from the United States.

The bank’s report read, “Every $1bn of demand destruction could impact earnings by ~0.05.” It also said that manufacturing in the U.S. “could be an incremental drag to EPS.”

Loup Ventures’ Gene Munster however remarked on the tariffs, “If passed, we believe these tariffs could lower the profitability of Apple Watch and AirPods by 10-20%, resulting in just under a 1% negative impact on Apple’s profits in FY19.”

Trump tweeted, “Apple prices may increase because of the massive Tariffs we may be imposing on China — but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting! #MAGA.”

It was last Friday that Apple wrote a letter expressing its worries over the tariffs. It read, “It is difficult to see how tariffs that hurt U.S. companies and U.S. consumers will advance the Government’s objectives with respect to China’s technology policies. We hope, instead, that you will reconsider these measures and work to find other, more effective solutions that leave the U.S. economy and U.S. consumer stronger and healthier than ever before.”

Disclaimer: We have no position in Apple Inc. (NASDAQ: AAPL) and have not been compensated for this article.