Evercore Backs Apple's Resilience as Global Tariffs Loom

As trade tensions between the U.S. and China escalate, Apple (AAPL) faces mounting risks from potential tariffs on its $395 billion supply chain. Yet Evercore ISI analysts remain bullish, reaffirming an Outperform rating and a $250 price target, arguing that Apple’s strategic moves to diversify manufacturing and absorb costs position it to weather the storm.

The Supply Chain Shift: A Buffer Against Tariffs

Evercore highlights Apple’s aggressive push to reduce reliance on China, where 80% of its manufacturing still occurs. Key progress includes:
- 35% of U.S. iPhone and iPad demand now sourced from India, with Foxconn and Tata shipping a record $2 billion of iPhones to the U.S. in March 2025.
- Half of Apple’s wearables (e.g., AirPods, Apple Watch) and Macs produced in Vietnam, shielding these segments from China-centric tariffs.

Despite these strides, Evercore warns that electronics remain under scrutiny in the U.S. Section 232 investigation. A 20% tariff on Chinese imports would cost Apple $6–8 billion annually, trimming earnings by ~$0.40 per share.

How Apple Plans to Offset the Pain

The firm outlines three mitigation strategies:
1. Price Hikes: Apple’s premium brand power may limit backlash if it passes costs to consumers.
2. Cost Sharing: Negotiations with suppliers to split tariff burdens.
3. Production Expansion: Accelerating moves to India and Vietnam, where labor costs are 50% lower than in the U.S., making domestic production unfeasible.

Evercore also notes Apple’s use of Boeing 747 freighters to airlift millions of iPhones, a costly but effective tactic to avoid port delays and tariff spikes.

Financial Fortitude vs. Analyst Skepticism

Apple’s $137 billion EBITDA and 46.5% gross margins provide a robust cushion against tariff shocks. Services revenue hit a record $26.3 billion in Q1 2025, diversifying its income beyond hardware.

Yet not all analysts share Evercore’s optimism. UBS maintains a Neutral rating ($236 price target), citing lingering risks from 145% tariffs on Chinese imports and tepid iPhone sales (a 1% shipment decline in 2024). Meanwhile, Morgan Stanley warns that over 80% of Apple’s production still in China could lead to a $7–8 billion revenue hit if tariffs escalate.

The Bottom Line: Resilience, But Risks Remain

Evercore’s confidence hinges on Apple’s supply chain agility and financial flexibility. The firm’s $250 price target reflects an ability to:
- Absorb tariff costs via cost-sharing and price hikes.
- Scale Indian/Vietnamese production to 35–50% of total output within two years.
- Leverage its $2.9 trillion market cap to outlast competitors in trade wars.

However, risks persist. A worst-case scenario—20% tariffs on all Chinese imports—would cut Apple’s EPS by nearly 5%, while geopolitical volatility (e.g., U.S. penalties on Chinese AI chipmakers) could disrupt supply chains.

Final Analysis: Buy with Caution

Evercore’s Outperform rating is justified, but investors should monitor two key metrics:
1. Supply Chain Diversification: Track Apple’s progress in India/Vietnam (target: 50% iPhone production outside China by 2026).
2. Tariff Exemptions: U.S. carve-outs for consumer electronics could reduce the bite of Section 232.

While Apple’s resilience is undeniable, the path to $250 depends on navigating a geopolitical minefield. For now, its scale and strategic moves make it the most tariff-ready tech giant—but the journey won’t be smooth.

In conclusion, Evercore’s stance is backed by data: Apple’s financial strength, services growth, and supply chain adjustments justify its bullish rating. Yet investors should remain vigilant—global trade dynamics could still shake the stock.