<div id="readability-page-1"><p>Shares of <strong>Apple</strong> <span>(AAPL<span> -2.88%</span>)</span> slumped on Friday in response to a new tariff threat from President Donald Trump. In a post on Truth Social, Trump threatened a tariff of at least 25% on all iPhones manufactured outside of the United States. Apple has been shifting some production from China to India, reportedly planning to make most of its U.S.-bound iPhones in India by the end of 2026.</p> <p>While it's unclear whether the Trump administration has the authority to impose tariffs on individual companies, Apple is in a lose-lose situation. Manufacturing iPhones in the U.S. would likely be prohibitively expensive, leading to prices that are well out of reach for many iPhone users. Alternatively, sticking with the plan to use Indian manufacturers risks substantial tariffs that would also force significant price increases and dull demand.</p> <p>There's no telling how all this will end, but Apple stock is looking like an especially risky proposition for multiple reasons.</p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTk0MjgvZ2V0dHktaGlnaC1yaXNrLXJpc2t5LWRhbmdlci1pbnZlc3RpbmctbWlzdGFrZXMtcGVubnktc3RvY2tzLW1hcmdpbi5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="465" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTk0MjgvZ2V0dHktaGlnaC1yaXNrLXJpc2t5LWRhbmdlci1pbnZlc3RpbmctbWlzdGFrZXMtcGVubnktc3RvY2tzLW1hcmdpbi5qcGcmdz03MDA"/></p><p>Image source: Getty Images.</p> </div> <h2>A secondary tariff risk and little reason to upgrade</h2> <p>While the trade war instigated by the Trump administration has cooled over the past month, new tariff threats against Apple and the European Union raise the specter of a reescalation that could push the U.S. economy into recession. Higher iPhone prices due to tariffs, coupled with an economic slowdown, would be a double whammy for Apple.</p> <p>Apple's iPhone business is already struggling to grow. Total iPhone revenue for the six months ending on March 29 was essentially flat year over year. The affordable $599 iPhone 16e was launched in February and likely helped drive iPhone upgrades, but that model will become much less affordable if tariffs are imposed.</p> <p>Part of the problem for Apple is that iPhone users don't have much reason to upgrade. Apple Intelligence, the company's stab at artificial intelligence (AI)-powered features, hasn't moved the needle so far, and the most exciting features have been delayed. A revamped version of Siri may not come until 2026 as the company struggles to make it work reliably. When it does arrive, it's hard to say whether it will be enticing enough to compel iPhone users to upgrade, particularly if tariffs have pushed prices up.</p> <h2>$20 billion could disappear</h2> <p>With <strong>Alphabet</strong> losing against the U.S. Department of Justice in multiple antitrust cases, the writing may be on the wall for Apple's lucrative deal with the search giant. Apple receives around $20 billion annually from Google to make Google the default search engine on its devices.</p> <p>That $20 billion is likely almost entirely profit, and it inflates Apple's services segment and profit considerably. Services are on pace to generate more than $100 billion in revenue for Apple in the current fiscal year, so the loss of the Google deal would be meaningful. While it's still unclear what impact the antitrust rulings will have on Alphabet, Apple's $20 billion deal could end up on the chopping block.</p>  <h2>A surprisingly lofty valuation</h2> <p>Despite Apple's sluggish growth -- revenue rose by just 5% in the latest quarter -- and the myriad risks the company faces, Apple stock is surprisingly expensive. Based on the average analyst estimate for fiscal 2025, Apple stock trades for around 27 times earnings. That's not far off from companies like <strong>Microsoft</strong> and <strong>Nvidia</strong>, which are booming thanks to AI demand.</p> <p>The worst-case scenario for Apple is the loss of the Google deal combined with significant tariffs on its products and an economic slowdown pushing demand lower. There's also the outside threat that somebody comes up with something that displaces the iPhone. OpenAI recently acquired former Apple designer Jony Ive's hardware start-up for an eye-watering $6.5 billion, and there's no shortage of other companies trying to come up with the next big thing.</p> <p>Given all the risks facing Apple and the stock's lofty valuation, buying shares of the tech giant looks like a risky proposition.</p>                                                                            </div>

AAPL

<p>Shares of Apple (AAPL) fell due to a tariff threat from President Trump, proposing a 25% tariff on iPhones made outside the U.S. Apple is shifting production to India but faces high costs and potential tariffs. The iPhone business is struggling, with flat revenue and limited reasons for upgrades. Additionally, Apple's $20 billion deal with Google may be at risk due to antitrust issues. Despite these challenges, Apple stock remains highly valued, making it a risky investment.</p>

- Apple shares fell due to a tariff threat from President Trump, proposing a 25% tariff on iPhones made outside the U.S.  
- The company is shifting production to India but faces high costs and potential tariffs that could raise prices and reduce demand.  
- With stagnant iPhone revenue and risks from antitrust rulings affecting its $20 billion deal with Google, Apple's stock appears overvalued and risky.

Buying Apple Stock Isn't Worth the Risk