What the Tariff Pause Means for Apple: Can the Stock Continue Its Recovery?

After shedding nearly 30% of their value between December 24 last year and April 8 this year, shares in Apple have recovered some lost ground, and it appears this is due to the delay in implementing at least some of Trump’s tariffs.

As a major player in the tech industry, Apple’s stock performance is always closely tied to global economic factors, trade policies, and investor sentiment. Recently, the U.S. government announced a 90-day pause on most reciprocal tariffs, reducing them to 10% for many countries, while tariffs on Chinese exports surged to 145%. Apple stood to lose more than many because it makes iPhones in China, but it has temporarily benefited due to a short-term exemption on key electronics, including iPhones.

For investors, this tariff pause could have far-reaching consequences on Apple’s stock performance. Can this reprieve help fuel further recovery in Apple’s stock price? In this article, we will explore the potential impacts of the tariff pause on Apple and whether it signifies a continued positive trajectory for its stock or merely a brief pause in the challenges faced by the tech giant – because there are other challenges beyond any potential trade disruptions.

 

How Tariffs Affect Apple’s Business Model

The Role of Tariffs in Global Trade and Apple’s Profitability

For those who’ve been on Planet Mars in recent months, Donald Trump returned to the White House and has launched what some would describe as the biggest threat to the global trade system since the Great Depression by implementing tariffs on (traditional) friends and foes alike. While the first Trump administration only focused on China, it has even imposed tariffs on Australia. Tariffs are taxes on imported goods that governments place to protect local industries from foreign competition.

For multinational companies like Apple, tariffs represent a major risk to profitability. Apple relies heavily on Chinese manufacturing (particularly through Foxconn) for its products, including iPhones, MacBook’s, and other consumer electronics. As a result, tariffs imposed on Chinese goods have had a direct effect on Apple’s production costs and product prices, with potential repercussions for its sales and bottom line.

The Financial Impact of Tariffs on Apple’s Earnings

Since the trade war between the U.S. and China escalated, Apple faced increased costs from the 10% to 25% tariffs that were placed on electronics like smartphones. For Apple, this meant higher prices for its products, which could dampen consumer demand.

Investors have known this threat even before the so-called ‘Liberation Day‘ when the tariffs were unveiled. Even during Trump’s first term, Apple CEO Tim Cook warned that tariffs could lead to higher costs for consumers and impact the company’s bottom line.

Apple even considered moving some of its production outside China to mitigate these costs (not just tariffs but also rising labour costs). However, Apple’s ability to innovate, diversify its offerings, and capitalise on its services revenue model has allowed the company to weather these challenges temporarily, even as tariffs have weighed on profit margins.

Tariff relief could provide a significant boost to profitability, particularly as it would help stabilise production costs and reduce the upward pressure on consumer prices. And so, investors welcomed the pause with a sense of relief.

 

What the U.S. Tariff Pause Means for Apple’s Stock

Temporary Relief: What the Tariff Pause Could Mean for Investors

The U.S. government has announced a pause on some of the tariffs imposed on Chinese imports. This pause, while temporary, represents a critical opportunity for Apple. With production costs potentially stabilising, Apple may be able to keep product prices steady, maintaining demand for its flagship devices like the iPhone, iPad, and MacBook.

From an investor’s perspective, the tariff pause provides short-term relief. The halt could help Apple avoid raising its prices further, ensuring its products remain competitive in a price-sensitive market. Additionally, with lower production costs, Apple could see an improvement in its profit margins, which would likely be viewed favourably by investors.

Moreover, this announcement could increase investor confidence, boosting Apple’s stock price as markets react positively to the news of reduced trade barriers.

Investors who were previously wary of Apple’s exposure to the China-U.S. trade war may view the tariff pause as a sign that Apple is moving into a more stable operating environment. But some may remain concerned about the threat of tariffs coming back and/or rising labour costs in China. Apple’s profit margin fell from 25% to 24% in 2024, and its profit fell by 3.4% to $93.7bn.

The Impact on Apple’s Supply Chain and Margins

The pause also alleviates some of the pressure on Apple’s complex supply chain, which relies heavily on China for parts and assembly. With fewer tariffs, Apple can maintain its existing supply chain arrangements without facing higher costs or delays. This can lead to more consistent production schedules, helping Apple meet demand for its products and services while also improving cash flow management.

For investors focused on Apple’s bottom line, this could translate into stronger earnings growth in the near term. With reduced costs and a smoother supply chain, Apple can focus on innovation and other strategic initiatives that contribute to long-term profitability.

 

Apple’s Long-Term Strategy: Will the Tariff Pause Make a Difference?

While the tariff pause provides immediate relief, it does not eliminate the long-term risks Apple faces due to its reliance on Chinese manufacturing. The ongoing geopolitical tensions between the U.S. and China remain a concern for investors, as future tariff escalations could resurface at any time. As a result, Apple has started diversifying its manufacturing base to reduce dependency on China.

Countries like India, Vietnam, and Indonesia are emerging as key alternatives for Apple’s production. Apple has already begun shifting some of its iPhone production to India, where labour costs are lower and trade tensions are less intense. By investing in alternative production hubs, Apple aims to mitigate the risks posed by future tariff changes, but this transition takes time.

For investors, this strategy is an important factor to monitor. The more successfully Apple can diversify its supply chain, the more insulated it will be from future trade-related shocks, leading to potentially more consistent performance in the long run.

 

The Future Outlook for Apple’s Stock: Will Recovery Continue?

The tariff pause offers a short-term boost, but Apple’s long-term stock performance will depend on a range of factors beyond trade policies. Apple has demonstrated remarkable resilience in the face of economic challenges, driven by its strong brand and diversified product portfolio. However, as competition intensifies, particularly in the smartphone and services sectors, Apple must continue to innovate and expand its offerings.

In the short term, the tariff pause could support Apple’s recovery by maintaining its cost structure and ensuring its products remain competitive. If the company continues to drive growth through services, wearables, and other non-hardware segments, Apple’s stock could continue its upward trajectory.

For investors, the key will be balancing short-term optimism with a long-term view. While the tariff pause is a positive development, Apple’s ability to adapt to an ever-changing global market and continue its track record of innovation will ultimately determine whether its stock can sustain its recovery.

Steve Jobs’s departure and death led to an end of the 2000s era of the company, unveiling groundbreaking product after another. Apple’s choice of Tim Cook as Jobs’ successor (rather than Jony Ive) showed the company was keen to enter a new direction of organic growth in the sense of growing demand for its existing products. The only legitimate new product it has unveiled in the Tim Cook era has been the Apple Watch, and it was launched about a decade ago.

With its market cap several times more than what it was in 2011, you cannot argue that the company has not delivered. And it is quite a feat for a company not just to survive but thrive in an era after the departure of its founder. However, it remains to be seen if this strategy can last forever. Will Apple need to unveil entirely new products at some point or be content with just unveiling a slightly better phone every couple of years? And if the latter, how long could it take before a new competitive upstart rises?

These concerns don’t need to be addressed in the short term. Analysts covering Apple (and there are over 40 of them) have a mean share price of US$238.75 per share, which is 18% above the closing price on April 15, 2025. And its P/E is not excessive at 27.9x for CY25.

But is it realistic to expect the decade to 2035 to be the same as 2015-2025 without significant innovation?

 

Conclusion: Is Apple’s Stock on Track for a Strong Recovery?

The U.S. tariff pause offers Apple significant short-term relief, allowing the company to stabilise its cost structure and maintain competitive product pricing. For investors, this could mean continued recovery in Apple’s stock, as it reduces some of the uncertainty around global trade policies.

However, while the tariff pause is a positive step, Apple’s long-term prospects will be shaped by its ability to navigate the complexities of global supply chains, ongoing geopolitical risks, and market competition/innovation.

As always, investors should take a holistic view of Apple’s business model, looking beyond short-term tax relief to assess its future growth potential. With its strong brand, innovative product offerings, and expanding services sector, Apple remains one of the most resilient companies in the tech space, poised for growth even in the face of ongoing global challenges.

 

What are the Best ASX Stocks to invest in right now?

Check our buy/sell tips.

FAQ

• How will the tariff pause affect Apple’s iPhone prices?

  The tariff pause is expected to help Apple avoid any immediate increases in iPhone prices, thus keeping its products more affordable and competitive in the U.S. market. This will likely maintain demand and ensure continued profitability.

• Is the tariff pause enough to sustain Apple’s recovery?

  While the tariff pause provides short-term relief, Apple’s ability to sustain its recovery will depend on its long-term strategy, including continued innovation, diversification of manufacturing, and expansion into new markets.

• How does the tariff pause affect Apple’s global supply chain?

  The tariff pause reduces the pressure on Apple’s global supply chain, allowing for more stable production and cost management. This is particularly beneficial as Apple can maintain production schedules without facing increased costs from tariffs.

• What is Apple’s strategy to reduce its reliance on China?

  Apple is diversifying its manufacturing by moving some production to countries like India and Vietnam. This helps reduce its exposure to the risks of future trade tensions and tariffs with China.

• What should investors focus on regarding Apple’s stock recovery?

  Investors should focus on Apple’s ability to continue innovating, expanding its services revenue, and managing its global supply chain risks. The tariff pause is a positive sign, but long-term stock growth will depend on these factors.