Apple investors have been on a roller-coaster ride in recent weeks. The iPhone maker is trying to avoid the worst of President Donald Trump’s tariffs, while also appeasing the U.S. government. The ups and down don’t look like they’ll stop soon.
Apple CEO Tim Cook, left, and U.S. President Donald Trump.
Apple stock has dropped 15.6% this year as Wall Street has parsed through concerns over the tech giant’s exposure to the Trump administration’s heavy tariffs. That’s underperforming the 1.3% gain of the S&P 500.
The selloff hit hardest in April, when Trump announced hefty so-called “reciprocal” tariffs on some of the country’s largest trading partners, with the most intense levies placed on China. Apple makes most of its products in China, leaving customers and investors concerned that prices of its imports would jump.
Much has changed since Trump announced those trade plans. The administration temporarily exempted electronic products like smartphones and semiconductors from the reciprocal tariffs. The administration also paused reciprocal tariffs on most countries for 90 days. Then on Monday, the U.S. and China agreed to lower reciprocal tariffs for 90 days.
The consistently changing headlines regarding tariffs have caused U.S. shoppers to worry about what’s next. On Friday, data from the University of Michigan showed that consumer sentiment fell to its second-lowest reading on record in May.
Apple has a lot to lose if people pull back on nonessential spending amid worries of a recession. According to KeyBanc analyst John Vinh, there are already some signs that consumers are shifting their buying habits for Apple products.
“Results from our April iPhone carrier survey and Key First Look Data were negative, reflecting a negative mix shift toward lower-end iPhone SKUs and panic buying ahead of tariff-related price increases,” Vinh wrote in a note on Thursday. He rates Apple stock as Sector Weight.
Apple didn’t immediately respond to a request for comment.
Apple has been making changes to its operations to try to avoid the most intense tariffs. CEO Tim Cook told investors on the company’s May 1 earnings call that he expected the majority of iPhones sold in the U.S. for the June quarter would be made in India, and that “almost all” iPad, Mac, Apple Watch, and AirPods products would come from Vietnam.
Trump isn’t thrilled with this decision. He wants the company to move production into the U.S., and tariffs were one way to persuade Apple to do that.
“I had a little problem with [Apple CEO] Tim Cook yesterday. I said to him, Tim, you’re my friend. I treated you very good. You’re coming here with $500 billion but now here you are building all over India,” Trump said in Qatar on Thursday.
Wedbush analyst Dan Ives wrote in a research note Friday that despite Trump’s desire for Apple to move its supply chain to the U.S., the “aggressive push towards India production has been a very smart strategic move.”
“We fully expect more pressure from the Trump administration on Apple to build iPhone production in the US…but as we have discussed this would result in an iPhone price point that is a nonstarter for Cupertino and translate into iPhone prices of ~$3,500 if it was made in the U.S. and this would take many years,” Ives wrote. He rates Apple as Outperform with a $270 price target.
Apple shares closed down 0.1% on Friday at $211.26.
The near-term future for Apple isn’t all that clear right now. If the tariff uncertainty and stock swings continue, investors will have to decide if they want to hang on to the bumpy ride.
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