It Will Cost 50% More to Make iPhones Thanks to New China Tariffs. How Should You Play Apple Stock Here?

Apple (AAPL) shares could find it incrementally more difficult to recover now that the U.S. has further raised tariffs on Chinese imports to 104%, according to KeyBanc analyst Brandon Nispel. 

Apple still assembles most of its iPhones in China. In fact, its key manufacturing partner, Foxconn, has the largest factory in Zhengzhou, which alone makes more than half a million iPhones per day. 

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Citing this substantial reliance on Beijing, Nispel maintained his “Underweight” rating on Apple stock this morning and lowered his price target to $170 that indicates potential downside of about 5% from here. 

Note that AAPL shares are already down over 25% versus their year-to-date high in late February. 

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Apple Stock Could Take a Hit as iPhone Sales Falter

Raised tariffs on China could increase the cost of making an iPhone by an estimated 50%. 

According to Brandon Nispel, the tech behemoth may pass these additional costs to the customers, but the demand will take a hit in response as tariffs are broadly expected to hurt consumer sentiment as well in 2025.

For his bearish view on Apple stock, the analyst also cited recent tracking data that suggests AAPL will come in shy of iPhone sales estimates in its current financial quarter. 

Note that a steep decline in its share price has made Apple lose its crown of the world’s most valuable company recently to Microsoft (MSFT).  

Switching to India Is Not a Perfect Solution for AAPL

Options available to Apple as it seeks to avoid exorbitant duties on Chinese imports include producing more iPhones in India. 

However, the world’s fifth-largest economy is not entirely free from Trump tariffs either. In fact, the multinational would have to raise prices by 12% to recoup costs incurred in building an iPhone in India, as per a UBS estimate. 

And the iPhone price could triple to $3,500 if it were made in the U.S. So, the potential threat to demand stays put even if AAPL moves production away from China. 

Other Firms Disagree with KeyBanc on Apple Shares

Investors should note, however, that KeyBanc is a contrarian call on Apple stock. 

The consensus rating on the iPhone maker still sits at “Moderate Buy” at the time of writing with the mean target of about $251 indicating potential upside of nearly 40% from current levels. 

On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.