Apple is facing new challenges amid U.S. trade policy developments. According to an analysis by Morgan Stanley, the likelihood of the company receiving a targeted tariff exemption is only 20%. The reason lies in a changed regulatory framework: unlike in 2018, the latest round of tariffs is being implemented under the International Emergency Economic Powers Act, which does not provide a mechanism for exemption requests.
Previously, companies could submit formal requests for tariff exemptions, allowing businesses to reduce costs and adapt to trade restrictions. However, the current tariff measures differ in structure.
The International Emergency Economic Powers Act, now in use, does not provide a standard application mechanism.
Exemptions can only be granted by a direct decision of the president, rather than through a standard procedure.
This creates additional barriers for companies hoping to mitigate the impact of tariffs.
Apple remains one of the companies that could suffer from these new restrictions, as most of its manufacturing is still concentrated outside the United States.
The company has repeatedly announced investments in the U.S. economy. In its latest statement, Apple pledged to invest $500 billion over four years. However, Morgan Stanley analysts believe such steps are unlikely to influence political decisions regarding tariffs.
Key arguments include:
Similar spending commitments were made in the past but did not lead to significant policy changes.
Apple’s core manufacturing remains overseas, and to receive special treatment, the company would need to make more substantial commitments to localized production in the U.S.
Analysts consider such a scenario unlikely.
If tariffs are not lifted or mitigated, Apple could face serious financial consequences. According to Morgan Stanley, additional costs could reach up to $33 billion per year.
Possible consequences for the company include:
A potential 26% drop in earnings per share (EPS).
Increased pressure on suppliers to redistribute costs.
Efforts to accelerate the relocation of some production.
Potential price increases for Apple products worldwide.
Analysts predict that if Apple takes measures to mitigate the impact, the actual effect on the consensus earnings forecast may be lower—around 10-15%.
At present, the situation remains uncertain. The key factors influencing future developments include:
The U.S. administration's political stance on Apple and other technology companies.
Apple’s next steps in adjusting its manufacturing strategy.
Market reactions to potential price increases and changes in production costs.
Given the shifts in trade policy, Apple’s chances of securing a tariff exemption appear low. The open question remains: what measures will the company take to minimize the impact of these new economic conditions.
Apple's tough road ahead shows just how unpredictable trade policies can be.
