Trump’s Tariff Threat Sinks Apple Stock: A $3,500 iPhone Nightmare?

• Apple (AAPL) shares dropped 3.7% to $193.95 in premarket trading after President Trump threatened a 25% tariff on iPhones not made in the U.S., challenging Apple’s production in China and India.
• Wedbush analyst Dan Ives called U.S.-based iPhone production a “fairy tale,” estimating it would take 5-10 years, cost $30 billion, and raise iPhone prices to $3,500, deeming it unfeasible.
• Apple’s shift to India, where 25% of iPhones will be produced by year-end, aims to reduce reliance on China, but Trump’s tariff threat could disrupt this strategy, impacting costs and consumer prices

President Donald Trump’s recent social media post on Truth Social, threatening a 25% or higher tariff on iPhones not manufactured in the United States, has sent Apple Inc. (AAPL) shares tumbling 3.7% to $193.95 in premarket trading on Friday. Trump emphasized his expectation that Apple CEO Tim Cook ensure iPhones sold in the U.S. are produced domestically, stating, “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.” This development has reignited concerns about trade policies under the 47th U.S. President, particularly impacting Apple, which relies heavily on global supply chains, with primary iPhone production in China and a growing manufacturing presence in India.

Apple has been strategically diversifying its production away from China, where approximately 90% of iPhones were historically assembled, to India, which is projected to account for 25% of global iPhone production by year-end. This shift aligns with India’s friendlier trade relationship with the U.S. and Apple’s $500 billion investment pledge in the U.S., primarily focused on AI-driven initiatives. However, Trump’s tariff threat directly challenges this strategy, as it demands U.S.-based manufacturing, a move that analysts argue is economically and logistically impractical.

Wedbush Securities analyst Dan Ives labeled Trump’s push for domestic iPhone production a “fairy tale fight” that Apple cannot win, estimating that shifting production to the U.S. would take 5 to 10 years and cost around $30 billion, resulting in an iPhone price point of approximately $3,500. Ives highlighted the complexity of Apple’s supply chain, noting that recent moves, such as Foxconn’s $1.5 billion factory investment in India, were designed to mitigate risks from U.S.-China trade tensions. A 25% tariff on India-made iPhones could disrupt these plans, potentially forcing Apple to either absorb significant costs or pass them onto consumers, risking demand for its flagship product.

The broader market context adds to the uncertainty. While Morgan Stanley (MS) remains bullish on U.S. assets, forecasting a S&P 500 (SPY) target of 6,500 by Q2 2026, Apple’s stock faces near-term pressure from tariff-related volatility. Global supply chain disruptions, coupled with Trump’s simultaneous threat of a 50% tariff on European Union imports, have rattled markets, with Germany’s DAX falling 1.9% and France’s CAC 40 dropping 2.4%. Despite a temporary tariff reduction on Chinese imports earlier this week, Trump’s latest rhetoric suggests a fragile trade truce, with Apple caught in the crosshairs.

Apple’s predicament underscores the challenges of navigating a protectionist trade agenda. While the company’s long-term investments in India and AI may bolster its resilience, the immediate threat of tariffs could strain profitability and consumer affordability. As trade negotiations continue, investors will closely monitor Apple’s response to this escalating pressure and its potential impact on the tech giant’s market position.

WallStreetPit does not provide investment advice. All rights reserved.

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