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Apple (NASDAQ: AAPL) hasn't been able to escape the marketwide sell-off, and is down around 20% from its all-time highs. There was considerable concern about how the company would fare because many of its electronics are manufactured in China. Apple has struggled to grow sales recently, and any price increase in its base product would have made that situation even worse.
However, Apple got some good news over the weekend: Smartphones and other electronics are exempt from the reciprocal tariffs. That means the iPhone won't be going up in price by 145%, which is the current tariff rate on China (although that's subject to change, as we've found out).
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Is this a big enough announcement to turn the stock around? Or is there something else that investors need to watch out for?
iPhones are still getting hit with a tariff, but not at the 145% level
Like most announcements about U.S. tariff policies, not all information is available at once. Commerce Secretary Howard Lutnick noted that the exceptions for electronic devices were only temporary. Eventually, they would be included in a semiconductor-specific tariff that will be announced within a month or two. While this gives Apple some breathing room for now, some other form of tariff is coming down the pipeline eventually.
So Apple's stock isn't roaring higher, because we're in another round of "wait and see" with tariffs.
President Donald Trump is concerned about all tech manufacturing being done outside of U.S. borders, which his administration says is a national security risk. Apple is taking steps to move more of its manufacturing back to the U.S., and announced a $500 billion investment over the next four years to build facilities across the U.S. that will produce its products.
We'll see if this buys Apple some grace from the Trump administration, but based on Trump's language surrounding its situation, exemptions won't be handed out at all. So there could still be some issues with Apple's products rising in price to offset the effects of tariffs, which would not help sales.
Apple still has a premium valuation despite its slow sales growth
Apple's sales growth has been nearly nonexistent over the past three years:
With Apple just now reaching its COVID-era sales peak, it will have to battle tariffs to return to this threshold. We don't know much about how the company believes tariffs will affect its sales, but we'll find out more on May 1 when it reports fiscal second-quarter sales (for the quarter ending in March 2025).