Apple (NASDAQ:AAPL) shares have fallen sharply, driven by escalating tariffs imposed by the Trump administration. £10,000 invested a week ago would be worth just £8,200 today. The tech giant’s stock dropped over 7% on 4 April alone, closing just above $188, its lowest level since May 2024.
The tariffs, which target Asian manufacturing hubs like China and Vietnam, will, in their current form, hurt Apple’s supply chain and increased production costs. China, its primary assembly location for flagship products such as iPhones and iPads, now faces a tariff of 34%, up from 20%.
Vietnam and India have also been impacted, with tariffs rising to 46% and 26%, respectively. These levies have rattled investors, compounded by broader market volatility that tends to hit high-growth stocks hardest.
Still not dirt cheap
While Apple shares are cheaper than they were on paper just months ago, they largely remain expensive relative to sector and index norms. To start, the company’s trailing 12-month price-to-earnings (P/E) ratio currently stands at 28.8, which is 4% lower than its five-year average.
On a forward basis, Apple’s P/E ratio declines gradually as earnings grow. By fiscal year 2028, consensus estimates project a P/E of 15.8, reflecting robust earnings-per-share (EPS) growth rates that accelerate from 7.8% in September 2025 to an impressive 28.6% by September 2028.
However, the price-to-earnings-to-growth (PEG) ratio — P/E adjusted for growth — suggests that the stock isn’t cheap compared to the technology sector average. The 2.3 PEG is 74% higher than the sector average, but represents a 10% discount to Apple’s five-year average.
Of course, it’s important to recognise that these figures are based on forecasts. The forecasts were made before Trump’s tariffs were announced.
A closer look at tariffs
The impact of tariffs on Apple’s business could be substantial if the company fails to secure exemptions. UBS estimates that retail prices for key Apple products assembled in heavily tariffed regions could rise significantly. It forecasts prices will rise by as much as 29% for the iPhone 16 Max produced in China, 12% for the iPhone 16 Pro made in India, and 19% for the Apple Watch assembled in Vietnam.
Such increases could dampen consumer demand and further pressure margins if Apple chooses not to pass on these costs to customers. Analysts at Needham predict that fiscal year 2025 EPS could drop by up to 28% if tariffs remain in place. This scenario underscores the precariousness of Apple’s current position amid an unpredictable trade environment.
Apple has also grown margins impressively in recent years. These tariffs look set to derail this progress.
Uncertainty galore
Looking ahead, uncertainty looms large over how the tariff situation will evolve. Recent developments suggest China is unwilling to back down in the face of Trump’s tariffs. What’s more the US administration may look to escalate things further.
While some analysts remain optimistic about the possibility of exemptions based on Apple’s past successes in navigating trade disputes, the outcome is far from assured. Investors must weigh these risks against the company’s long-term growth prospects and its ability to adapt to shifting geopolitical dynamics.
Apple would need to be a lot cheaper for me to consider buying. It’s a quality company, but earnings will likely be hammered by the trade policy.
