Apple is facing major financial pressure following the announcement of new tariffs under the Trump administration. The levies have already rattled the company’s global supply chain and sent its market value tumbling, including a loss of $250 billion in a single day. Unless the company is able to get an exemption from the tariffs, it might be forced to raise the prices of its products, which analysts expect could hit its annual earnings hard.
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Apple Could Lose $33B in Profit as Tariffs Shake Supply Chain, Prices May Rise Without Exemption
AppleInsider cites a research note passed along by Morgan Stanley analysts, which shows that Apple’s net income could face a hit of around $33 billion from the new tariffs. The company is now in an awkward position. If it decides to eat the extra costs to protect consumers from rising prices, its profit margins will take a big hit. On the other hand, Apple might also lose customers and revenue if it increases the price.
Fortunately, analysts say Apple is sitting on a stock of already-manufactured iPhones, which may allow the company to delay passing along the extra costs for a short time. But while Apple has promised to invest $500 billion in the United States in four years, that may not be enough to get a pass through the new tariffs. Experts say Apple has only a 1 in 5 chance of getting an exemption, and the structure of the exemption process doesn’t seem to be in the company’s favor.
TF International Securities analyst Ming-Chi Kuo adds that Apple could see an 8.5% to 9% decline in gross annual revenue due to the current situation. However, he also points out some measures the company could take to reduce the financial damage, such as ramping up iPhone production in India. This move would help Apple diversify its manufacturing base and lessen its reliance on regions directly affected by the tariffs.
