The price of Apple shares increased by 15% on Thursday after a temporary suspension of the vast U.S tariffs. This gave some relief to tech stocks beaten by escalating trade tensions. The stock fell 23% within the last five sessions, which is considered to be one of the most severe short-term declines in several years. Yet, with the slight rebound, Apple is still nearly 20% below of its $250 peak that took place earlier in 2025.

The announcement by Trump on new tariffs on over 100 countries, sent investors into agitation. On the other hand, with a 90-day breathing room before the duties come into effect, attention is now shifting to strategy. This might give Apple just enough of a grace period to refocus its operations and restore investor confidence.

Adapting to Tariff Winds

While a tariff threat on iPhones from China remains, Apple appears composed to withstand the disruption with its usual resilience. The company has a number of leverages:

  • Pricing Power: Apple has not raised the base price for its flagship iPhones in the last seven years, whereas U.S inflation over this period has been nearly 30%. Hence, it has room to move iPhone prices upwards without upsetting consumers.
  • Carrier Subsidies: In a bid to win iPhone customers, wireless carriers in the U.S have long subsidized iPhones. Hence, these carriers will likely absorb some of that extra cost, thus mitigating the impact of price increments on end users.
  • Production Shifts: Apple could step up its shift away from China-based manufacturing, with India emerging as an important alternative. The recently announced suspension has brought tariffs down to as low as 10% in India. Given the strong supply chain credibility of Tim Cook, this shift seems plausible.

Service Revenue Leads to Strength

Apple’s services department, which encompasses every aspect from iCloud to Apple TV+, has been quietly growing into the company’s most dependable growth engine. In the most recent quarter, services revenue jumped 14%, topping the hardware lift of just 1.5%. Gross margins in this segment have reached 75%, nearly twice that of Apple’s physical product lines.

That margin protection could prove crucial when hardware profits take a temporary hit from tariffs. As only around 25 to 30% of Apple’s total revenues come from the U.S, continued strength in countries like India and Southeast Asia will save the company bottom lines even if conditions remain bumpy domestically.

Room for Recovery

Apple’s earnings may drop 30% this year in a worst case scenario, where investors are looking for an outcome that is probably going to be even depressing. In accordance to the past, Apple always outpaced during collapses. In both, the Covid and 2022 inflation shock, Apple’s decline were parallel or greater than those of the broader S&P 500, and have experienced rapid rebounds. Today, the decline is almost double that of the broad index, suggesting that these values may be an overreaction by investors. Apple’s loyal lifestyle integrated clients, high-margin business segments, as well as its ability to change into what it must do to provide good foundations for the company to recover.

The fundamentals of Apple have not been shattered, but investor confidence sure has. The company has made great progress in tackling the tougher storms. Trade policy uncertainty may cause short-term volatility, but the strategic flexibility and financial strength make it likely that Apple will have every opportunity to return to its highs and recover $250 or more. Betting against Apple in these turbulent times has historically proven unwise, and 2025 could just be another reminder of that. Long-term investors should take this opportunity to silence the panic and tune into opportunity.