\ud83d\udcca Tariffs Could Impact Apple’s Earnings & Pricing
- Bank of America estimates a 10% tariff on Apple (NASDAQ: AAPL) products imported into the U.S. could reduce EPS by 2% to 3% unless offset by price increases.
- The tariffs follow a memorandum signed by former President Trump, calling for a reciprocal tariff system affecting multiple U.S. trading partners.
\ud83d\udccc Key Projections:
- Apple sells approximately 50M iPhones, 15M iPads, and 10M Macs annually in the U.S.
- A 3% price hike could offset the tariff but reduce unit sales by ~5%, lowering EPS by 2.4% in 2026.
- To fully absorb the impact, Apple would need to increase prices by 9%, assuming a 5% decline in unit sales.
\ud83c\udf0d Supply Chain Complications: India & China
- While Apple has shifted some production to India, potential reciprocal tariffs from the U.S. could outpace China’s 10% rate.
- This adds uncertainty to Apple’s supply chain strategy, potentially affecting sourcing decisions.
\ud83d\udd17 Key Financial Insights
\ud83d\udd11 Key Takeaways
\u2714 A 10% tariff could reduce Apple’s EPS by up to 3% unless mitigated by price hikes.
\u2714 Apple may raise prices by ~3%, which could soften the impact but reduce unit sales.
\u2714 Shifting production to India doesn’t eliminate risk, as reciprocal tariffs could be higher.
\u2714 Investors should monitor Apple’s pricing strategy and supply chain adjustments closely.
