Apple (AAPL) Stock: Trade War Concerns Impact iPhone Manufacturer

TLDR

Nearly 90% of iPhones are manufactured in China, exposing Apple to tariff risks Apple’s stock has dropped 23% since the beginning of 2025 iPhone sales declined 9% year-over-year in Q1 2025 in China Upcoming tariffs on smartphones could increase manufacturing costs Apple faces growing competition from Chinese brands like Huawei and Xiaomi

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Apple is facing mounting pressure as tensions between the United States and China continue to rise. The tech giant’s heavy reliance on Chinese manufacturing has put it in a vulnerable position as trade conflicts escalate.

Nearly 90% of iPhones are still produced in China. This makes Apple particularly exposed to any changes in trade policies between the two countries.

Apple Inc. (AAPL)

While smartphones have been spared from recent tariffs, former President Donald Trump has indicated that more electronics could soon be targeted. This would directly impact Apple’s supply chain.

The company’s stock has felt the effects of these concerns. Apple shares have dropped approximately 23% since the beginning of 2025.

Manufacturing Dependencies

Apple’s relationship with China dates back to the 1990s. It deepened when the company partnered with Foxconn to produce iPods and iPhones.

Over time, Apple helped build a powerful manufacturing ecosystem in China. Today, 150 of Apple’s top 187 suppliers are based there, according to Nikkei Asia.

This concentration of production creates both efficiency and risk. The scale and speed of China’s manufacturing capacity would be difficult to replicate elsewhere.

There have been growing calls for Apple to move production to the United States. However, supply chain experts say such a transition would take years.

Even a massive $500 billion investment in U.S. manufacturing might not fully protect Apple from the political and operational risks it faces.

Market Challenges in China

Beyond manufacturing concerns, Apple is also losing ground in the Chinese consumer market. The company faces stiff competition from local rivals.

Brands like Huawei, Xiaomi, and Vivo have built on the very supply networks that Apple helped establish. These companies are gaining market share at Apple’s expense.

Last year, Apple lost its position as China’s top smartphone seller. iPhone sales declined 9% year-over-year in Q1 2025 in the Greater China region.

Apple’s challenges in China aren’t limited to competition. The company has made concessions to operate there, including limiting features like AirDrop and Bluetooth under government pressure.

China has also pushed back with export controls on rare earth minerals. These materials are critical for tech manufacturing.

Financial Outlook

As Apple prepares to announce its FY 2025 Q2 results on May 1st, investors are watching closely. One analyst known as Lighting Rock Research has expressed concerns about further losses.

The investor warns that tariffs on smartphones could increase Apple’s manufacturing costs. This could lead to higher prices and reduced demand.

Passing these costs to consumers might drive down sales revenue. The analyst believes Apple’s stock price could drop further when the Trump administration announces smartphone tariffs in the coming months.

Geopolitical tensions could also trigger consumer boycotts in China. This has happened to other American brands like Nike in the past.

While Lighting Rock Research recommends selling Apple stock before its earnings release, Wall Street remains more optimistic. The stock currently has a Moderate Buy consensus rating, with 18 Buy, 13 Hold, and 3 Sell ratings.

Analysts project a 12-month average price target of $239.67, suggesting a potential upside of approximately 24%.

The recent tariff exemption gives Apple some breathing room. However, with trade tensions continuing to escalate, this relief may prove short-lived.

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