Apple (AAPL) saw its shares drop 6% recently, following quite a historic rally the day before when President Trump paused most tariffs. AAPL's stock soared 15.3% in a single day, marking their highest one-day increment since 1998. However, notable highs such as these were followed by lows, underscoring Apple's susceptibility to the ongoing U.S.-China trade tensions.
Apple's reliance on Chinese manufacturing, where approximately 90% of its products are made, makes it particularly vulnerable to these tariffs. For instance, Apple shares suffered a near 25% slump in the period between Trump's tariff announcement and the tariff pause.
Despite this volatility, Bank of America maintains a 'buy' rating on Apple stock, highlighting its steady cash flows, resilient earnings, and potential benefits derived from AI. The bank has even deemed the recent pullback as an enhanced buying opportunity.
However, the U.S.-China trade war continues to place Apple in precarious territory. China matched Trump's 34% tariff rate last week, which only served to escalate the tariff exchange as Trump reacted by increasing tariffs on Chinese imports even more.
One potential mitigating action that Apple reportedly plans to take is to increase shipments of U.S.-bound iPhones from India to lessen the tariff impacts. According to Morgan Stanley analysts, Apple would have to double its iPhone production in India to completely shield U.S. consumers from the Chinese manufacturing link - a viable, albeit potentially lengthy action plan.
In the meantime, Apple may resort to pulling its lower-margin, low-storage iPhone models and increase financing options to counter higher pricing impacts, as per analysts' predictions.