TLDR

• Apple stock dropped 14% in one week following Trump’s tariff announcement, erasing nearly $300 billion in market value
• New tariffs target China (54%), Vietnam (46%), and India (26%), all critical to Apple’s manufacturing ecosystem
• iPhone prices could rise by up to 43% if Apple passes on costs, potentially pushing iPhone 16 Pro Max to $2,300
• Morgan Stanley estimates tariffs could cost Apple $33 billion annually and reduce earnings per share by 26%
• Despite the drop, analysts maintain confidence in Apple’s long-term growth potential and strategic adaptability

Apple shares took a beating last week, plummeting 14% and erasing nearly $300 billion in market value following President Donald Trump’s announcement of sweeping new tariffs. The stock finished the week at $188.38 after dropping 9% on April 3 and another 5% on April 4.

The sharp decline came as investors assessed the potential impact of the newly announced tariffs on Apple’s manufacturing ecosystem. Chinese imports now face a steep 54% rate, while Vietnam and India—countries Apple has been using to diversify its supply chain—aren’t spared either, with rates of 46% and 26%, respectively.

Unlike during Trump’s first term when Apple secured exemptions for several products, there is currently no formal process in place for requesting waivers. This leaves the tech giant in a precarious position.

Price Hikes on the Horizon?

Apple now faces a difficult choice: absorb the tariff costs or pass them on to consumers. According to analysts, iPhone prices could increase by as much as 43% if Apple were to transfer the entire cost burden.

This would push the base iPhone 16 from $799 to potentially $1,142. The premium iPhone 16 Pro Max could reach a staggering $2,300.

Morgan Stanley has weighed in with some concerning estimates. The investment bank suggests these tariffs could cost Apple an additional $33 billion annually.

Furthermore, they project a potential 26% reduction in earnings per share if the company takes no mitigating actions. That’s a serious hit to the bottom line that has investors worried.

Manufacturing Challenges

Moving production to the United States presents its own set of challenges for Apple. Industry experts estimate that assembly costs could jump dramatically if such a shift were to happen.

The cost of assembling an iPhone could rise from roughly $30 per phone in China to $300 in the US. This tenfold increase would further pressure Apple’s margins.

For Apple, the path forward likely involves complex negotiations with suppliers and potential price adjustments. There may also be direct discussions with the White House to seek relief.

Long-Term Outlook Remains Positive

Despite the short-term volatility, many analysts are maintaining their positive outlook on Apple’s prospects. The company has demonstrated resilience in navigating previous trade tensions.

Apple’s focus on international expansion, particularly in emerging markets like India, could help offset possible revenue disruptions due to geopolitical tensions. This diversification strategy may prove crucial in the coming months.

Over the past five years, Apple’s total shareholder returns, including price appreciation and dividends, reached an impressive 189.66%. This strong track record gives many investors confidence despite the recent turbulence.

Apple has also been expanding its service offerings. The company recently integrated CONNEQT Health’s arterial biomarkers into its Health app, marking a step toward enhancing its health management capabilities.

This move aligns with Apple’s broader strategies of expanding service offerings and leveraging AI advancements for growth. While the announcement failed to boost short-term share prices, it could support long-term earnings if health services expand.

Revenue is projected to grow by approximately 6.5% annually, according to analyst estimates. The integration of health data technology might further bolster service revenue and profit margins.

Apple’s current share price remains approximately 11.6% below the consensus price target of $252.59. This indicates potential upside as many analysts see the stock as undervalued relative to its fair value estimates.

The tariff situation remains fluid, with the potential for exemptions or modifications still on the table. Apple has successfully navigated similar challenges in the past.

Most recently, the Nasdaq entered bear market territory as trade tensions escalated between the U.S. and China. This broader market turbulence has affected many tech stocks, not just Apple.