"Apple Inc (AAPL) May Have to Pass On Tariff Impact to Consumers"

Ladies and gentlemen, buckle up! We're diving headfirst into the world of Apple Inc (AAPL) and the potential impact of the new 10% tariff on China imports. This is a game-changer, folks, and you need to be ready for it!



First things first, let's talk about the elephant in the room: the tariffs. The U.S. just slapped a 10% tariff on China imports, and Apple, with its massive manufacturing presence in China, is right in the crosshairs. BofA Securities analyst Wamsi Mohan has crunched the numbers, and the verdict is in: Apple might have to pass on some of that tariff impact to consumers.

Now, you might be thinking, "But wait, Apple can just raise prices, right?" Well, not so fast. Mohan's analysis shows that if Apple maintains existing pricing in the U.S., the earnings per share (EPS) impact would be a whopping ($0.12). If Apple chooses to raise prices, the EPS impact would be ($0.07). That's a significant hit to the bottom line, folks!

But here's the thing: Apple has options. Mohan assumed that Apple could source 80% of its products sold in the U.S. from different countries besides China. That's right, folks! Apple can manufacture most iPhone models in India, and as the new tariff kicks in, Apple could have its manufacturing partners ramp up production in India and ship to the U.S. This is a massive opportunity for Apple to diversify its supply chain and mitigate the impact of the tariffs.



Now, let's talk about the long-term implications. Apple is facing a strong iPhone upgrade cycle in fiscals 2025 and 2026, driven by the need for the latest hardware to enable Gen AI features. This is a massive growth opportunity for Apple, and it could help the company maintain its market share and profitability, despite the potential impact of the tariffs. Mohan's fiscal 2025 revenue and EPS are $411 billion and $7.30, respectively, indicating a strong outlook for Apple's financial performance.

But here's the kicker: the potential resolution of Google and Apple’s cases against the DOJ by the Trump administration. If the Trump administration resolves these cases favorably, it could create a more lenient regulatory environment for Apple. This would reduce the burden of compliance costs and allow the company to focus more on operational efficiencies and cost management.

So, what's the bottom line, folks? Apple might have to pass on some of that tariff impact to consumers, but the company has options. With a strong iPhone upgrade cycle on the horizon and the potential for a more favorable regulatory environment, Apple is well-positioned to weather the storm. But don't just take my word for it—do your own research and make an informed decision. This is a no-brainer, folks! Apple is a buy!