Bank of America (BAC) shares plummeted 5.02% in intraday trading on Thursday, as the escalating trade war between the United States and China sent shockwaves through the banking sector. The sharp decline comes amid broader market uncertainty and concerns over the potential impact on financial institutions and their corporate clients.

The latest round of tariff increases has rattled investors, with President Trump raising tariffs on China to 125% from 104%, despite announcing a 90-day pause on 'reciprocal tariffs'. This move has fueled fears of a prolonged trade conflict between the world's two largest economies, potentially hampering dealmaking, capital markets activity, and overall economic growth.

Adding to the concerns, a Bank of America analyst report highlighted the potential consequences of trade tensions on major corporations. The report suggested that if Apple were to shift iPhone production to the U.S. due to trade pressures, it could face a staggering 90% increase in costs. This scenario underscores the far-reaching implications of the trade war on various sectors and their banking partners.

As Bank of America prepares to report its quarterly earnings next week, investors will be closely watching for any indications of how the ongoing trade disputes and economic uncertainties might affect the bank's performance and outlook for the remainder of the year.