Yesterday I reported that Apple stock is down due to repercussions from the Trump administrations’ many new tariffs. In an X post, analyst Ming-Chi Kuo says there are five ways Apple can deal with the situation. To wit:
India and Vietnam are far more likely than China to secure US tariff exemptions. Though the timeline is unclear, this would speed up Apple’s shift of assembly orders away from China until non-Chinese production can satisfy most US demand.
While the new tariff policies undoubtedly negatively impact Apple, the company has multiple options against it. In the US market, high-end iPhones account for 65-70% of new model sales, and high-end consumers are relatively more accepting of price increases. Apple could also use many strategies like increasing carrier subsidies or cutting Trade-In program discounts to offset tariff costs while softening the perception of price hikes.
Apple could also offset tariff impacts by squeezing its supply chain, putting greater pressure on most suppliers to cut costs.
Even if tariffs push Apple’s gross margin below 40%, this dip should be short-lived, with long-term margins likely staying above 40%, given the strategies above.
More critically, the medium- to long-term focus should be on the potential macroeconomic fallout from the Trump administration’s new tariff policies, as weaker consumer confidence and purchasing power could lengthen Apple’s device replacement cycles.
