Last Friday (April 4), Apple (NASDAQ:AAPL) stock fell over 7% to close just above $188. This was the lowest level since May 2024, and it’s now getting close to the $165 mark at which it traded last April. A couple of months ago, it would have been crazy to think that I could be buying Apple shares near the lowest level in a year. Here’s my thinking right now.
Reasons for the steep fall
To simply say that Apple stock fell due to the Trump tariff announcements doesn’t do it justice. Digging deeper, the primary catalyst was the fact that Asian nations were hit with high tariff rates, in places where Apple has a large manufacturing presence.
For example, China is Apple’s primary manufacturing hub, responsible for assembling flagship products like the iPhone and iPad. China now faces a 34% tariff, up from the previous 20%. Operations in Vietnam are now subject to a 46% tariff!
Other places where Apple operates, such as India and Malaysia, are further impacted. Ultimately, the new levies threaten to disrupt its supply chain and increase production costs.
Aside from this company-specific factor, Apple was caught up in the heavy selling as it’s a high-growth stock. During periods of market volatility, such stocks typically experience the largest falls. On the other hand, defensive stocks from sectors such as utilities and consumer staples tend to outperform.
Assessing the future
To some extent, the management team at Apple has tried to prepare for some tariff impact. In late February, the business announced plans to invest more than $500bn in the US over the next four years. The plan, which involves hiring around 20,000 new staff members and having a server factory in Texas, was designed to try and protect against import levies.
This is an early sign of what could be pushed shortly, as the company tries to reassure investors. However, it’s important to note that transitioning manufacturing operations is a complex and time-consuming process. It’s not like Apple can stop production in Asia and flip it to the US tomorrow. These strategy shifts can take months, or more often than not, years.
Investors are likely aware of this, meaning I don’t think Apple shares are worth buying yet. Of course, trying to pick the perfect time to buy a falling stock is impossible. Yet based on the implications of the tariff news, I struggle to see any reason why the share price should rally from its current level.
Better options out there
When it comes to the stock market in general, I think there are some great opportunities after the fall last week to buy some undervalued stocks. However, I don’t think this applies to Apple yet. It’s one of the companies that is majorly impacted by tariffs and so will need to rethink its business model significantly in the coming weeks and months.
I could be wrong about a further fall in the stock. If President Trump shifts his trade policy or if Apple gets tariff exemptions on some components, then the stock could rebound swiftly. But I don’t see this happening, so I am staying away from buying right now and I don’t see it as one for other investors to consider either.
