Take a deep breath. We just watched the tit-for-tat U.S.-China trade war begin again.
Last weekend President Donald Trump signed executive orders imposing 25% tariffs on imports from Canada and Mexico and 10% on goods from China.
The tariffs on Canada and Mexico were deferred after negotiations, but the ones on China took effect at 12:01 a.m. EST Feb. 4. Soon after, China announced retaliatory tariffs on select American imports and an antitrust investigation into Google.
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But when it comes to tariff risks among tech giants, Google (GOOGL) might not be the most vulnerable.Â
Apple (AAPL)  could be.
That’s because a significant portion of Apple’s products are assembled in and shipped from China.
In cities like Zhengzhou and Shenzhen — often dubbed “iPhone City” — hundreds of thousands of workers can rapidly produce millions of devices, a scale that’s hard to quickly replicate elsewhere.
In the first Trump administration Apple received exemptions from the tariffs then imposed on China imports. But it probably won’t happen this time, several analysts have stated.
These tariffs could drive up production costs, potentially leaving Apple with the choice of raising prices or absorbing the costs, which would cut into profit margins.
Rosenblatt analyst Barton wrote that he expected Apple to pass price increases to consumers, according to CNBC.
Apple didn’t comment on the tariffs.
Apple stock is down 8.95% year-to-date.
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Bank of America on how the tariff might affect Apple
Bank of America sees the tariff’s effect as “manageable” as Apple can mitigate the effects by adjusting supply chains and pricing strategies.
Analysts led by Wamsi Mohan point to Apple’s ability to shift production outside China. “Most iPhone models can now be manufactured in India,” Mohan said.
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“As the new tariff is imposed on imports from China, Apple could have its manufacturing partners ramp up production in India and ship to the U.S.,” he wrote. “This could also be done for other Apple products that are manufactured in countries including Vietnam, Malaysia, etc.”Â
According to the Hindustan Times, a newspaper in India, Apple is now “manufacturing the entire iPhone 16 lineup, including iPhone 16 Pro and iPhone 16 Pro Max, in India,” an Apple spokesperson said.
Bank of America also said that “80% of the devices sold in the US can be sourced from outside of China” and estimated that Apple might hold off on price increases for now.
The bank reiterated a buy rating and a price target of $265 on Apple stock, citing “stable cash flows, earnings resiliency and potential beneficiary of AI use on edge devices.” This target was set after Apple posted earnings last week.
Analysts mixed on Apple shares after recent earnings
On Jan. 30 Apple reported for the fiscal 2025 first quarter ended Dec. 28, 2024. Following the earnings, several analysts reacted differently to the Apple stock price target.
Net income reached a record $36.33 billion, or $2.40 a diluted share, up from $33.92 billion, or $2.28, in the year-earlier period. The company reported record revenue of $124.3 billion, a 4% increase from a year earlier.
IPhone revenue declined nearly 1% to $69.14 billion. IPhone remains the company’s biggest sales driver, accounting for 55.6% of the revenue in the quarter.
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Sales in the Greater China region, Apple’s biggest overseas market, declined 11% due to increased competition from local brands and regulatory challenges affecting the availability of Apple Intelligence features.
Citi raised its price target on Apple to $275 from $255 with a buy rating, thefly.com reported.
The investment firm notes that while Apple is catching up with a staggered Apple Intelligence AI release, its focus on end-to-end AI security from silicon to private servers is underestimated.
Moreover, Citi says the recent introduction of DeepSeek, which reduces computing costs and enables optimized local models, can accelerate AI adoption on devices.
Meanwhile, KeyBanc analyst Brandon Nispel maintained an underweight rating on Apple and affirmed a $200 price target. The analyst has adjusted his below-consensus estimates. according to thefly.com.
KeyBanc says Apple’s Q1 results were disappointing but its Q2 guidance was a bit of a relief.
UBS sees continued “flattish” iPhone demand in Q2 and fiscal 2025. The investment firm has a neutral rating and $236 price target on Apple shares.
Apple closed at $232.80 on Feb. 4. The stock was down 8.95% year-to-date at that point. At last check the stock was off 1.8% at $228.72.
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