Analysts Turn Bearish on Apple Amid Trump’s China Tariffs

US President Donald Trump has increased the tariffs on China to a whopping 145% while pausing the retaliatory tariffs on other countries by 90 days. Analysts have been slashing their target price on Apple amid the growing trade war between the US and China.

Bank of America, Jefferies, Morgan Stanley, and Wedbush are among the brokerages that have cut Apple’s target price this month. Wedbush analyst Dan Ives who had a Street-high target price of $325 on Apple lowered his target to $250 while maintaining his overweight rating.

Analysts Slash Apple’s Target Price

“Apple could be set back many years by these tariffs,” said Ives speaking with CNBC. The tech analyst who previously termed Trump’s tariffs as an “Armageddon scenario” for the US tech sector added that Apple “had their boat flipped over in the ocean with no life rafts.”

Notably, while Apple has been diversifying its supply chain to countries like India and Vietnam, it still sources most of its products from China.

Ives estimates that 90% of iPhones and between 75% and 80% of its iPads are produced in the China and in his note, he warned, “For U.S. consumers the reality of a $1,000 iPhone being one of the best made consumer products on the planet would disappear.”

He added, “Price points would move up so dramatically it’s hard to comprehend and the near-term margin impact on Apple’s gross margins during this tariff war could be mind boggling.”

While Trump has been pushing for onshoring of manufacturing, analysts believe that it would dramatically increase the costs of iPhones. “You build that (supply chain) in the US with a fab in West Virginia and New Jersey. They’ll be $3,500 iPhones,” said Ives in his note.

iPhone Prices Might Rise

With imports from China now attracting a 145% tariff, most analysts believe that Apple would need to raise iPhone prices. According to Le Xuan Chiew, research manager at Omdia, “When the original China tariffs were at 54%, that kind of impact was serious, but manageable … but, it wouldn’t make financial sense for Apple to raise prices based on the current tariffs.”

Macquarie Equity Research analyst Cherry Ma believes that price hikes are “inevitable” for Apple. “We think a global-scale price hike in the coming iPhone 17 series is more likely than a US-only price hike driven by price harmonization strategy justified by the major feature upgrades we expect to see (new cameras, a new slim form factor and new Pro casing design),” said Ma in her report.

However, Morgan Stanley analyst Erik Woodring believes that Apple can avoid price hikes by increasing sourcing from India and changing the product mix. ″[I]f Apple is able to shift demand towards higher-margin iPhone models, it can lessen the blow from China tariffs as India production also ramps,” said Woodring in his note.

He added, “Synthetically, this means iPhone [average selling prices] will increase, but a 256GB iPhone 17 Pro will remain the same price as a 256GB iPhone 16 Pro ($1,099).”

Notably, over the last year, Foxconn which builds most Apple iPhones has expanded its presence in China. India has been a focus market for Apple and it even opened its two retail stores there last year.

Could Trump Grant a Relief to Apple?

KeyBanc analyst Brandon Nispel expects Apple to miss sales estimates in the March quarter. “Going forward, while we don’t quantify tariff impact, we believe there is uncertainty,” he said in his note.

Nispel added, “The impacts of higher costs could be offset by higher ASPs (average selling prices), which, in turn, could impact demand. But there are also concerns of a broader consumer spending impact globally, as well as ‘nationalism’ movements regionally, that make putting out a confident estimate difficult, though we remain below consensus (estimates).”

There are speculations that Trump might grant some relief to Apple from his China tariffs. “I still see some potential relief that can come in the form of concessions for Apple based upon its $500 billion U.S. commitment,” said Daniel Newman, CEO of The Futurum Group.

He added, “This hasn’t been discussed much — but I’m optimistic that companies that commit to U.S. expansion may see some form of relief as negotiations progress.”

Notably, a few weeks after Trump’s inauguration Apple committed to invest $500 billion in the US.

US-China Tensions Are Hurting US Brands

Meanwhile, growing US-China tensions are also working to the detriment of US brands. China is increasingly becoming a tough market for foreign brands like Apple, General Motors, and Starbucks and they have been losing market share to domestic Chinese companies.

Apple lost its position as the biggest smartphone seller in China last year and fell to the third spot as domestic Chinese rivals gained market share at the iPhone maker’s cost. Vivo was the top-selling brand in the world’s second-biggest economy last year followed by Huawei whose sales have surged over the last two years.

According to data from research firm Canalys, Apple’s shipments in China fell 17% YoY in 2024 which was the biggest annual decline for the Cupertino-based company. Moreover, its shipments fell in all four quarters with the pace of decline widening to 25% in the fourth quarter.

Apple had a full-year market share of 15% in China last year while Huawei and Vivo respectively had a 16% and 17% share. Huawei has come up with competitively priced premium models and has grabbed significant market share from Apple.

Apple Intelligence Features Are Still Not Available in China

Several factors seem to be hampering iPhone sales in China including the unavailability of “Apple Intelligence” features.

These artificial intelligence (AI) features were expected to be the key selling point for iPhone 16 but were launched much after the model went on sale. Also, these features are not available in China and the E.U. due to regulatory issues. Earlier this year, Apple partnered with Chinese tech giant Alibaba which would help it bring its Apple Intelligence features to the country.