Microsoft beats Apple to become the world's most valuable company

President Donald Trump's tariffs on China that went into effect from Wednesday at a rate of 104% sparked a retaliatory 84% tariff from China on American goods. The move caused Apple's market value to plummet by 23% across the past four trading days, erasing over $700 billion. This also caused Apple to lose its status as the most valuable company in the world to Microsoft. While Apple was worth $2.59 trillion, Microsoft was valued at $2.635 trillion.

Apple depends heavily on China for manufacturing; close to 90% of iPhones reportedly are made in China. Morgan Stanley analysts predicted last week that tariffs could cost Apple $34 billion per year, a cost that Apple could pass on to consumers. The declining demand for Apple is due to investor concerns that tariffs could cause Apple to raise prices, leading to decreased demand.

The threat of rising iPhone prices caused increased foot traffic to Apple stores over the weekend and into the week. According to Apple store employees, customers were concerned about possibly higher iPhone prices in the future and were buying phones in a panic.

Trump has stated that tariffs would boost the U.S. economy by incentivizing companies to bring jobs and factories back to the U.S.

In a tariff announcement last week, Trump pointed to the "unsustainable" trade deficit, which hit $1.2 trillion last year, and stated that he would impose higher tariffs on countries with the largest trade deficits with the U.S., including China, the European Union, Mexico, Vietnam, and Ireland.