MW Apple hasn't gotten an 'all clear' on tariffs, but its stock is still surging

By Emily Bary

While Trump promises new tariffs for tech products, Apple seems to have avoided the worst-case scenario, as smartphones are exempt from the current reciprocal tariffs against China

Apple Inc. hasn't yet gotten the "all clear" signal on tariffs, but Wall Street is celebrating anyway.

Shares of Apple $(AAPL)$ are up 6% in premarket action Monday, reflecting relief over guidance from U.S. Customs and Border Protection that exempted smartphones, laptops and other consumer electronics from the steep reciprocal tariffs on China. While Commerce Secretary Howard Lutnick said that the Trump administration plans different tariffs focused specifically on tech - and Trump himself denied that the exemptions were exemptions - investors see Apple in a better spot now.

"Friday's tariff exemptions suggest that [Apple] will avoid material near-term increases in costs of its products imported into the U.S. from China and India," Needham analyst Laura Martin wrote.

By her estimates, Apple makes more than 80% of its products in China, and "it would take many years to move even 20% of [Apple's] supply chain to the U.S." Doing so would also lead to significant price hikes on products, "given the pay scale difference between China and ... U.S. employees," she wrote.

That said, she noted that there are still risks to Apple's free cash flow stemming from the tariff cloud. For instance, Apple could incur higher costs or see disruptions to its process of sourcing components. Martin flagged that Apple reportedly flew more than 1 million iPhones to the U.S. from India to get ahead of tariffs.

Melius Research analyst Ben Reitzes also wrote that Apple isn't getting full relief here, but he now sees a better outlook for the company. He previously worried that Apple's margins could fall by up to 10 percentage points given the company's reliance on Chinese manufacturing.

"With the weekend news pushing us to think the hit could be much less than everyone feared, the Lutnick comment could mean we are not out of the woods yet," Reitzes wrote. "However, you could argue Apple's stock was already regaining some ground - and [earnings per share] could be over $1 better than feared - and say Apple deserves to trade over 30 dollars more than its recent low of $172."

Apple previously agreed to invest $500 billion in the U.S. over four years, and Reitzes thinks the company may need to boost that "to get out of paying tariffs altogether."

He said that purchases of iPhones and other Apple products "likely surged in March and April ahead of tariffs," which could be a boost to March-quarter results - but with the risk "that sales may tail off in the months of May and June."

-Emily Bary

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April 14, 2025 09:08 ET (13:08 GMT)

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