Is President Trump just giving investors a reason to sell?

apple (NASDAQ: AAPL) Optimized its costs through a global manufacturing footprint. If President Donald Trump in his own way, the relationship - especially with China - could end. iPhone manufacturers use the massive and cheap labor market in China and other Asian countries to cheaply build and assemble hardware before selling it to consumers around the world, making money in the process.

Now, with a large amount of tariffs from China imports, Apple has begun moving some of its manufacturing to India to hedge the bets. However, this has caused anger from Trump, who said Apple will face a 25% tariff on iPhone imports and should make products in the United States to re-made manufacturing.

According to analysts, building iPhones in the United States will greatly increase Apple's operating costs. Will this give investors a reason to sell their shares?

Assembling iPhones in the United States will increase the variable cost of Apple's hardware products due to higher labor costs. Analysts estimate that the manufacturing sector will be moved to the U.S. while increasing the per capita price from $40 to $40 or higher. Apple may make up for these costs by raising the retail price of iPhones, but consumers ask a lot when flagship devices already cost about $1,000.

Last quarter, Apple's product division gross margin was less than $25 billion, which is revenue minus manufacturing/assembly costs. If Apple is forced to pay high tariffs or make phones in the United States, these huge profits could disappear, reducing bottom-line income and free cash flow. Apart from the higher costs in the U.S., Apple’s supply chain will not be immune to tariffs, part of the iPhone is imported from Asia and still suffers high tariffs at the time of writing.

In fact, about half of Apple's gross profit comes from its high-profit service sector, which is not directly affected by tariffs. This includes revenue from the App Store and distribution agreements from Google, which is the default search engine on the Safari web browser. In fiscal year 2024, Apple had $71 billion in total gross profit of $181 billion in service.

These high-profit income streams are attacked by antitrust lawsuits. Now Apple is forced to allow mobile apps to use alternative payment methods to avoid 30% of their payment processing fees, which could lead to some profits disappearing. The current lawsuit could bar Apple from accepting $20 billion (or more) of annual payments from Google to get default search engine status, another potential profit reduction.

The two of them were lying on the bed as they looked at their cell phones.
Image source: Getty Images.

Even before these threats from tariffs and antitrust lawsuits, Apple did not fire at all cylinders compared to other "magnificent seven" stocks. Apple's revenue has grown only 3% over the past three years. letter29% increase, Microsoft36% growth, and Nvidia"s" rose 339% over the same time frame. The company simply doesn't grow much anymore because it can't deliver any new hardware devices close to the iPhone.

In artificial intelligence (AI), Apple may fall behind the competition. It failed to release updated services for Siri while allowing competitors to provide cutting-edge breakthroughs for consumers in text, video and image generation. Today’s numbers are not coming, but Apple faces the main risk of not winning the next great tech paradigm, which, despite today’s vast brand moat, will ultimately impact its bottom line.

AAPL Income (TTM) Chart
YCHARTS’ AAPL Income (TTM) data

Apple stocks fell 17.8% this year. I believe that today's investors' stocks still look overvalued. It trades at a price of 31 (p/e), higher than S&P 500 Even if letters grow much faster, average and above letters.

Low-growth stocks are traded with premium returns to owning dangers, even if they have performed well in the past. If tariffs, litigation and failure to win AI lead to worsening the power of the global technology sector, Apple may see its earnings eventually heading in the wrong direction. If Apple is lower than today's profits in five years, it won't shock me.

For these reasons, Apple stock is now easy to sell from your portfolio.

Before you buy Apple stock, consider the following:

this Motley Fool Stock Advisor The analyst team just confirmed what they think is 10 Best Stocks Investors buy now…and Apple is not one of them. Ten stocks with layoffs could generate monster returns in the coming years.

When to consider Netflix On this list on December 17, 2004...If you invested $1,000 when you suggested, You will have $651,049! * Or when Nvidia This list was listed on April 15, 2005...If you invested $1,000 when you suggested, You will have $828,224! *

Now, it's worth noting Stock ConsultantThe overall average return is 979% - Compared to market fights 171% For the S&P 500 index. Don't miss the latest top ten list, available when you join Stock Consultant.

View 10 stocks »

*As of May 19, 2025, stock consultants will return the goods

Alphabet executive Suzanne Frey is a member of the board of directors of Motley Fool. Brett Schafer has posts in the alphabet. Motley fool has a place and recommends letters, Apple, Microsoft and Nvidia. Motley Fools suggest the following options: January 1, 2026, Microsoft $395 Phone, Short January 2026, Microsoft $405 Phone. Motley Fool has a disclosure policy.

Apple Stocks: Is President Trump just giving investors a reason to sell? Originally published by Motley Fool