Trump's Tariff Threat Will Cause Further Pain for Apple's Shares

Apple Inc. is facing mounting pressure as its stock continues to decline, marking its longest losing streak in more than three years. The selloff comes amid renewed threats from former President Donald Trump, who on Friday warned that a 25% tariff could be imposed on Apple products unless the company relocates iPhone production to the U.S. Apple’s shares dropped 3% to end the week, notching their eighth consecutive daily decline — the longest stretch of losses since January 2022. This intensifies concerns about the company's already troubled outlook for profits.

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Although some market analysts doubt that such tariffs will ultimately be enforced, the potential consequences are significant. If the tariffs are implemented, Apple would either have to absorb the extra costs, thereby squeezing its profit margins, or raise prices for consumers.

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Both scenarios could be damaging, especially during a time when the company is grappling with slowing revenue growth and challenges in the artificial intelligence space.

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Haris Khurshid, chief investment officer at Karobaar Capital, noted that even if the threat is more political than practical, it still injects uncertainty into the market. “The markets can’t ignore the headline risk,” he said. “You can’t run a $3 trillion company with a trade grenade hanging overhead.” This kind of rhetoric, he added, chips away at investor confidence and makes long-term planning more difficult.

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Apple has had the worst performance among the so-called Magnificent Seven tech stocks in 2025, with shares down 22% for the year. That’s a sharp contrast to the relatively modest 0.5% dip in the Nasdaq 100 Index. Technically, the stock has fallen below key moving averages, but it hasn't yet reached levels considered "oversold," based on its 14-day relative strength index. Meanwhile, the CBOE Apple VIX — a volatility gauge specific to Apple shares — surged more than 30% last week, reflecting investor nervousness.

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While Apple is no stranger to tariff-related market volatility, Friday’s drop was relatively mild compared to the sharp declines seen in April when Trump first hinted at tariffs. Back then, Apple experienced its most significant four-day loss since October 2000. However, those earlier threats were later softened, with exemptions made for key electronics, including smartphones and computers, as part of broader negotiations between the U.S. and China.

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Matt Stucky, chief portfolio manager of equities at Northwestern Mutual Wealth Management, said Friday’s moderate reaction suggests that investors aren’t convinced the tariff will be enacted. “If the market truly believed a 25% tariff was imminent, we’d have seen a much steeper selloff,” he explained.

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Interestingly, Trump's stance evolved rapidly. Just hours after targeting Apple specifically, he expanded the threat to cover all foreign-made smartphones. That change could actually work in Apple’s favor, according to JPMorgan analyst Samik Chatterjee. If every smartphone maker faces the same tariff, Apple’s strong brand and pricing power could help it outperform competitors, both with consumers and suppliers.

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Still, Apple has few realistic options to fully comply with Trump's demands. Wedbush analyst Daniel Ives described the idea of building iPhones entirely in the U.S. as a “fairy tale.” Apple’s supply chain is incredibly complex, involving a global network of suppliers, assemblers, and specialized equipment. Bloomberg Intelligence estimated that shifting iPhone assembly to the U.S. would take multiple quarters. Bank of America added that such a move could push iPhone production costs up by more than 90%.

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To preemptively manage potential cost increases, Apple has reportedly considered raising prices. However, the company is cautious about being seen as reacting directly to tariffs, since Trump has also criticized firms for doing just that.

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Estimates vary on how tariffs would affect Apple’s financials. Bloomberg Intelligence projects that tariffs could shrink Apple’s gross margin by 300 to 350 basis points in fiscal 2026. Citigroup analyst Atif Malik sees a 130 basis point hit, translating to about a 4% decline in earnings per share. Wells Fargo’s Aaron Rakers believes Apple would need to increase iPhone prices by $250 to $300 to maintain current margins. Ives at Wedbush went further, estimating that U.S.-made iPhones would cost roughly $3,500 apiece.

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In response to these uncertainties, analysts have been revising their expectations. The consensus forecast for Apple’s 2026 net earnings has dropped by 5.1% over the past three months, while revenue projections are down 3.9%. Lower earnings expectations make the stock seem more expensive, as its price-to-earnings ratio climbs. Apple currently trades at about 26 times expected earnings — above its 10-year average and higher than some peers with stronger growth prospects.

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This combination of elevated valuation and slow growth presents a tough environment for investors. Brian Mulberry, a portfolio manager at Zacks Investment Management, described Apple’s current state as a “no-win situation.”

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While long-term investors may eventually see an attractive entry point, he believes the stock’s valuation and the prevailing uncertainty make it too early to jump in.

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“You’re trying to catch a falling knife right now,” Mulberry warned, summing up the challenges facing one of the world’s most valuable companies.

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