Apple’s ‘Wall of Worry’ Mounts with New Tariff Risks, Warns Morgan Stanley

Apple (AAPL) is once again in the crosshairs of global trade tensions. According to a fresh note from Morgan Stanley, new tariff headlines are adding to the tech giant’s growing list of investor concerns, raising the stakes for its supply chain and margins. For context, President Trump recently threatened to impose a 25% tariff on iPhones not made in the U.S. Nonetheless, analyst Erik Woodring reiterated his Buy rating on AAPL stock at a price target of $235.

Apple Unlikely to Shift iPhone Output Over 25% Tariff

Morgan Stanley believes Apple is unlikely to move iPhone production back to the U.S., even with a 25% import tariff as it still makes more financial sense for the company to keep making iPhones overseas. That’s because, building iPhones in the U.S. would raise production costs by about 35%, far higher than the 4–6% price increase needed to absorb a 25% import tariff. In other words, even with tariffs in place, Apple saves more by continuing production in China or India than it would by shifting manufacturing to the U.S.

They further pointed out that building new U.S. factories would take over two years and cost billions of dollars. Additionally, producing iPhones in the U.S. would delay the speed at which new models reach the market, something Apple is keen to avoid.

In short, the added cost from tariffs isn’t enough to outweigh the time, money, and production challenges of reshoring.

Apple’s Resistance May Trigger Harsher Tariffs

Morgan Stanley also added that Apple’s refusal to shift iPhone production to the U.S. could come with consequences. The bank warned that CEO Tim Cook’s relationship with the current administration may worsen, increasing the risk of even higher tariffs. Consequently, this may build a larger “wall of worry” for Apple investors.

Still, Morgan Stanley said it had already accounted for 10–30% tariffs on all U.S.-bound imports after the June quarter. It estimates that the proposed 25% tariff on smartphones would only reduce Apple’s fiscal 2026 earnings per share by about 11 cents.

Are Apple Shares a Good Buy?

On TipRanks, AAPL stock has a consensus Moderate Buy rating among 29 Wall Street analysts. That rating is based on 17 Buys, eight Holds, and four Sells assigned in the last three months. The average AAPL price target of $228.22 implies a 14% upside from current levels.

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