Apple's Tariff Impact: 10 Things Investors Should Know

Core Viewpoint - The focus of Apple's fiscal Q2 2025 earnings call shifted from artificial intelligence to the impact of tariffs, with management and analysts discussing the implications of tariffs on the company's business operations. Group 1: Financial Performance - Apple's revenue for fiscal Q2 increased by 5% year over year to $95.4 billion, with earnings per share rising by 8$1.65, surpassing Wall Street estimates [3] - The company did not experience significant pull-forward demand in Q2, as channel inventory levels remained stable throughout the quarter [4] Group 2: Tariff Impact - Apple projects a tariff-related cost increase of approximately $900 million in Q3, which is considered relatively low by analysts [5] - The company has built up inventory to mitigate the impact of tariffs, with manufacturing purchase obligations rising from$34.2 billion to $38.4 billion year over year [7] - Most iPhones sold in the U.S. during Q3 are expected to originate from India, while other products will primarily come from Vietnam [8] Group 3: Specific Tariff Exposures - Some AppleCare and accessories products are subject to the steep 145% tariffs on Chinese imports, although the exposure is limited [9] - Most Apple products are not currently affected by global reciprocal tariffs due to an ongoing Section 232 investigation by the U.S. Commerce Department [10] - The company's tariff exposure for Q2 and Q3 is mainly related to tariffs imposed under the International Emergency Economic Powers Act (IEEPA) on imports from Canada, Mexico, and China [11] Group 4: Pricing and Future Outlook - Apple has not announced any potential tariff-related price increases, but it is likely that the company will consider passing on higher costs to consumers [12] - There is significant uncertainty regarding the future, particularly beyond the June quarter, with executives emphasizing that the outlook assumes no worsening of the global macroeconomic situation [13]