TLDR:
- US exempted smartphones and computer hardware from steep China tariffs, boosting tech stocks
- Apple shares rose 5.5% in premarket trading after falling 9.1% in previous two weeks
- UBS analyst David Vogt maintains “Buy” rating with $236 price target (19.1% upside)
- Reduced tariffs expected to limit Apple’s earnings impact to 5% of 2026 forecast
- Apple increasing iPhone production in India, now at 20% of global output
Tech stocks rallied Monday after the US government exempted smartphones and computer hardware from hefty reciprocal tariffs on Chinese imports. The move offered welcome relief to the sector, which had been under pressure due to supply chain concerns.
Apple shares jumped 5.5% in premarket trading. The stock had previously dropped 9.1% over the past two weeks as investors worried about potential price hikes for iPhones if large tariffs were imposed.
Other tech companies also saw gains. HP rose 6% while Dell Technologies jumped 6.8% in premarket trading. Chip giant Nvidia climbed 1.8% as part of a broader recovery in semiconductor stocks.
The White House announced the tariff exemptions on Friday. The list covers 20 categories of products, including computers, laptops, semiconductor devices, memory chips, and flat panel displays.
These exemptions suggest growing awareness within the Trump administration about how tariffs could affect inflation-weary consumers. The focus seems particularly on protecting popular electronics products like smartphones and laptops.
Wall Street Reaction
UBS analyst David Vogt remains upbeat about Apple’s prospects following the tariff reduction from 145% to 20%. He maintained his “Buy” rating on Apple stock with a price target of $236.
Vogt had initially calculated that a 145% tariff on technology imports from China could have cut Apple’s earnings by 30%. Under the new tariff structure, he expects a much smaller impact.
The analyst now projects the reduced tariffs will result in just a $0.34 per share drop in Apple’s earnings. This represents about a 5% reduction to his 2026 earnings forecast of $7.49 per share.
Another analyst, Amit Daryanani from Evercore ISI, called the exemption “a major relief for Apple.” He noted that the original tariffs would have driven substantial cost increases for the company.
Production Shifts Underway
Despite the current reprieve, uncertainty remains about future trade policies. President Trump has pledged to announce fresh tariffs on imported semiconductors within days.
US Commerce Secretary Howard Lutnick also indicated that the exempted electronics would face separate new duties along with semiconductors within the next two months.
In response to ongoing tariff threats, Apple has been boosting iPhone production in India. This strategy aims to reduce reliance on China and avoid potential price increases for consumers.
India currently accounts for 20% of Apple’s global iPhone production. The country is projected to produce over 30 million iPhones annually, potentially meeting a significant portion of US demand.
However, shifting production locations presents challenges. The upcoming iPhone 17 is still primarily set to be manufactured in China.
The exemptions have also benefited Apple’s suppliers. Foxconn, the largest iPhone assembler, rose as much as 7.8% before closing 3% higher. Contract laptop maker Quanta closed up 5.8%.
“The removal of the worst-case scenario provides at least temporary support for the sector,” noted analyst Alberto Gegra of Equita. He added that it helps avoid a complete supply blockage that could have resulted from tariffs on China exceeding 100%.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, described the net effect as positive for tech. He emphasized that giants like Apple could have seen “their entire pricing strategy thrown into disarray under the proposed 145% China tariffs.”
Instead, the reprieve gives Apple time to build US inventory for the current iPhone sales cycle without needing hasty price increases.
On Wall Street, Apple stock currently has a “Moderate Buy” consensus rating. This is based on 17 Buys, 12 Holds, and 4 Sells assigned by analysts in the last three months.
The average price target stands at $242.61, suggesting a potential upside of 22.44% from current levels.
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