Apple shares powered higher in early Monday trading following a weekend move by President Donald Trump to offer tariff temporary tariff relief to the tech sector by limiting duties on China-made components until a broader schedule of levies is fully completed.
Apple (AAPL) , which relies on China for around 20% of its global revenues and nearly 90% of its current iPhone production, had faced the prospect of a 145% tariff by the time the President had finished hits tit-for-tat escalation with officials in Beijing last week.
Trump’s surprise move late Friday, as well as clarifications over the weekend, lowered that level to around 20% in terms of China-made components, but raised the prospect of steeper levies over the near-term once the administration works out its tariff schedule for the semiconductor space.
“We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations,” President Trump said in a social media post over the weekend.
Had the President’s original 54% tariff on China-made goods, or his escalated levy of 145%, remained in place, Apple would have faced the prospect of absorbing the huge increase in costs, which would pressure its profit margins, or pass them on to customers, which would blunt its overall sales growth.
By some estimates, even the 54% tariff would boosted the cost of Apple’s cheapest iPhone by 43%, to $1,142 per unit, while the steeper levies would have taken the iPhone Pro to around $2,000 per unit.
Apple CEO Tim Cook has deftly managed his relationships with U.S. President Donald Trump and China President Xi Xinping.
“Late Friday’s announcement of exception from tariffs on smartphones is probably the best case scenario we can think of for Apple, which makes it unlikely that our prior downside price target (of $170 per share) would be achieved, and takes a big risk off the table,” said KeyBanc Capital Markets analyst Brandon Nispel.
Apple not “fully out of the woods” – KeyBanc
Nispel, who lifted his rating on Apple stock to ‘sector weight’ from ‘underweight’ in a note published Monday, said headwinds tied to Apple’s sluggish AI rollout and a pullback in consumer spending mean the tech giant is not “fully out of the woods” in terms of its year-to-date slump.
He also noted the overhang tied to the Department of Justice’s antitrust lawsuit against Google parent Alphabet (GOOGL) . which could threaten the $20 billion it pays to Apple each year from search revenues earned through the Safari browser.
“That said, with the worst case scenario of continuing “tit-for-tat” trade war escalation likely no longer in play and the exception on smartphones from tariffs, we find it difficult to argue for further downside,” he added.
Related: Analysts revisit Apple stock price targets as Cook courts Beijing
Wedbush analyst Dan Ives, meanwhile, kept his $250 price target an ‘outperform’ rating in place for Apple following what he described as a “dizzying weekend of tariff news” that ultimately provides the tech giant with breathing room to work around the new China trade realities.
The potential for a month of two of lead time before President Trump unveils semiconductor-specific tariffs should allow it to “plan its supply chain for a tariff component with India likely the biggest focus area for expanded iPhone production,” Ives said.
Tariff climbdown a ‘big relief’ – JPMorgan
The 20% tariff on China-made goods that remains in place for the tech sector, and the 90-day pause on so-called ‘reciprocal’ levies that leaves the global baseline at 10%, is a “somewhat manageable level that Apple would be able to plan for over the coming months with a clear pass through to US consumers while absorbing some by itself/supply chain,” he added.
JPMorgan analyst Samik Chatterjee also described Friday’s tariff exemptions on smartphones and laptops as a “big relief” for the tech giant, and boosted his price target by $25, taking it to $270 per share.
“The exemption will help return investor focus back to some of the medium-term drivers, but we expect several concerns to remain from the developments over the last two weeks and limit investors from immediately turning to any bull case focused on upside drivers relative to evaluating downside to earnings expectations in recent weeks,” Chatterjee said.
Related: Top analyst overhauls Apple stock price target amid key iPhone challenge
“We expect the exemptions issued on Friday to bolster investor confidence relative to an eventual direct impact on cost headwinds to be more modest than initially presumed for the hardware industry, including Apple, and drive a re-rating of Apple shares along with the rest of the coverage,” he added.
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Apple posted December-quarter revenue of $124.3 billion, its highest-ever holiday tally, even as iPhone sales slipped amid the uneven Apple Intelligence rollout. Services revenue rose 14% to $26.3 billion.
The group also posted a record bottom line of $36.3 billion, a 10% increase from the year-earlier period.
Finance chief Kevan Parekh, meanwhile, said Apple’s March-quarter revenue would likely rise in the low- to mid-single-digits percent, an advance that likely translates to a tally of between $91.7 billion and $95.3 billion.
Apple will publish its fiscal second quarter results after the close of trading on Thursday May 1.
Apple shares were marked 5.65% higher in premarket trading to indicate an opening bell price of $209.35 each, a move that would still leave the stock down nearly 17% for the year.
