Apple Faces Tariff Challenges but Has a History of Exemptions
Apple boasts a loyal customer base, strong profit margins, and a track record of securing tariff exemptions—factors that could help it navigate the latest trade tensions.
On Wednesday, President Donald Trump sent shockwaves through the tech sector with a tariff announcement that one analyst described as “worse than the worst-case scenario.”
Wedbush’s Daniel Ives called Trump’s plan to impose a 34% tariff on Chinese goods “the jaw dropper” of the day, noting that it would be on top of an already announced 20% tariff.
Apple Inc. (AAPL) saw its stock tumble 7.1% in after-hours trading Wednesday, making it one of the hardest-hit tech stocks. If those losses carry into Thursday’s regular session, it would mark the company’s worst single-day decline since September 3, 2020, when shares fell 8.0%.
While investors often sell first and assess later, Apple was granted tariff exemptions during Trump’s first term. The key question now is whether the company can secure similar relief this time.
Ives believes Apple will likely be spared again. “It’s a very nervous announcement for Apple given its China exposure,” he told MarketWatch. However, he expects iPhones and other Apple products to receive exemptions. “Investors will sell the stock and ask questions later, but we saw it play out in Trump 1.0,” he added.
Apple’s sharp stock drop highlights two pressing concerns if the tariffs take effect. First, while Apple has diversified its supply chain in recent years, broader tariffs make that less effective. The company has expanded production to Vietnam, but Trump also announced a 46% tariff on Vietnamese goods. Second, in today’s economic climate, Apple may struggle to raise consumer prices without impacting demand and profitability.
Some argue the selloff is overblown.
“Even without an exemption, the impact may not be as severe,” said Angelo Zino, a technology analyst at CFRA, who maintains a buy rating on Apple. “Over the last six years, Apple has expanded its gross margins from about 38% to 47%, which gives them some flexibility to absorb tariff costs.”
Apple could also distribute costs across its supply chain. But if price increases reach customers, the company will rely on strong brand loyalty and its ecosystem of services, which account for roughly 21% of total net sales.
“For now, the White House insists it’s not negotiating exemptions,” Ives wrote. “But we believe there will be offramps and major negotiations in the coming months to navigate this new tariff landscape.”
Apple did not immediately respond to MarketWatch’s request for comment. When asked about tariffs during the company’s last earnings call in January, CEO Tim Cook said it was “monitoring the situation” but had no further comment.
Zino remains confident in Apple’s ability to adapt. “We trust Apple’s management to execute better than most in the tech industry.”
