The recent earnings report of Apple highlights an increase in iPhone sales, but the surge comes at a time when their expectations are dampened due to increasing tariff issues. This indicates a significant crisis for the Californian tech company in its attempts to cope with the evolving global trade paradigm. While Apple has been managing these impacts better than many other technology firms, its flexibility in navigating geopolitical headwinds is becoming increasingly limited.

Apple’s Profit and Its Piece of the Service Industry Pie

The degree of dependence Apple possesses on international manufacturing allows it a unique position in the upper echelons of Silicon Valley. Unlike players such as Meta and Microsoft who depend heavily on software and derive significant revenue from services, Apple, on the other hand, earns most of its revenue from hardware, including iPhones, iPads, and MacBooks. For instance, in the latest quarter, Apple reported total sales of $95.4 billion, of which $26.6 billion was generated from services. However, the vast majority tied to the products experiencing tariffs remains stagnant. The firm’s exposure to President Trump’s 145% import duties on Chinese goods is striking, with Tim Cook predicting a $900 million loss caused by tariffs in Q3 2025.

In addition, Apple is shifting its production activities to India and Vietnam and diversifying its supply chains to mitigate the effects of the tariffs. However, the countries still fall under the range of some US tariffs. Currently, the US does impose a tariff on imports from India and Vietnam, though these tariffs are on hold for the duration that the Trump administration is trying to work out a deal on the trade agreement. However, Apple is still stuck in the middle of a trade-off, as the balance of these trade deals fuels speculation.

Final Thoughts on Apple’s Outlook with Trade Uncertainty

Despite the negative outlook that Apple seems to possess due to the tariffs, the rest of the industry does not paint an altogether positive picture. As much as ‘the more, the merrier‘ deter Apple from being able to widen its supply chain, analysts at Jefferies and UBS have also voiced similar concerns on how falling iPhone sales and profit margins could dominate in the near future. If the Trump administration does move forward with the Section 232 investigation towards semiconductor tariffs, the possibility of reimposed tariffs on electronics, such as computers, will skew towards the negative.