Apple has lost $450 billion in market capitalization since President Trump announced his reciprocal tariffs on Wednesday.  Shares are now trading below $200 per share.

With the majority of Apple's (NASDAQ:AAPL) manufacturing base in China, Trump’s new 54% tariffs (new 34% + prior 20%) are a significant hit for the company.

This morning, matters took another turn after China retaliated with a 34% tariff on U.S. goods. So far, Trump hasn’t hit back with his promised hike for any country that retaliates against the U.S. tariffs.  However, Trump said in response that “China played it wrong,” suggesting a raise could be forthcoming.

What is the impact on Apple’s profits?

Wall Street analysts have varying assessments about the impact of the tariffs on Apple. However, they all agree on one thing - they will be bad. 

In a note to clients on Thursday Rosenblatt analyst Barton Crockett said he sees Apple facing a $40 billion tariff cost. This would equal a 32% hit to operating profit and EPS.

BofA Securities analyst Wamsi Mohan said if the tariffs stick and Apple absorbs the entire $20 billion of headwind and 500bps to GMs, they expect an impact of $1.24 to EPS.

Could Apple get an exemption from Trump?

In February, Apple announced a $500 billion investment in the U.S. over the next four years.  This, according to some, could provide the company with enough goodwill with Trump to get an exemption like they did in Trump’s first term as President.  However, not everyone thinks this will work out in the company’s favor this time.

Morgan Stanley analyst Erik Woodring sees only a 20% chance that Apple will get a tariff exemption.  Woodring explains that the fundamental process of getting a tariff exemption differs this time.

“During the first Trump administration, companies had weeks to formally respond to the USTR Section 301 tariff lists and provide feedback/reasons for specific product exemptions,” Woodring said. “This time, the Trump administration has implemented global tariffs through the International Emergency Economic Powers Act (IEEPA), which means no formal product list was presented in advance, and there is no official process for requesting tariff exemptions.”

Should you plug your nose and buy Apple now?

BofA’s Mohan said that with a potential $1.24/share hit to EPS and 25x multiple, the lower end of the past 5-year range, they see downside risk in the stock to $180.

Morgan Stanley’s Woodring said that given that Apple could raise prices gradually, a bear case EPS hit may be down 10-15%.  This suggests CY26 EPS of $7.19, versus the consensus of $8.19. Apply a trough multiple of 24x that gets you to a $172 stock.

Apple’s shares are currently trading at $193.

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