Trump tariffs: Apple less vulnerable than ‘many might believe,’ Bernstein says

Investing.com-- Apple Inc (NASDAQ:AAPL) is less vulnerable to increased trade tariffs from a potential Donald Trump presidency, Bernstein analysts said, although higher tariffs still presented margin pressure across the board for U.S. electronics makers.

Bernstein estimated that even if U.S. IT hardware companies increased prices by 20% due to higher tariffs, net profits stood to be materially impacted, especially for companies with lower gross margins. Dell Technologies Inc (NYSE:DELL) and HP Inc (NYSE:HPQ) appeared the most vulnerable, while IBM (NYSE:IBM) was likely to be the least impacted.

Bernstein analysts said Apple was less vulnerable than broader consensus would suggest, with its high gross margins able to absorb higher tariffs despite its high exposure to the tech supply chain, especially in China. The company is expected to see a 7% hit to earnings per share. 

Trump- who was seen pulling ahead of Kamala Harris in early counting for the 2024 election- has proposed steep trade tariffs on imported goods regardless of the country of origin.

On China, however, Trump has proposed a 60% tariff on all goods, and as much as 200% tariffs on goods from Mexico. While Trump may not need Congressional approval to impose the duties, the Republicans were seen winning a majority in both the Senate and the House of Representatives. 

U.S. tech firms were likely to hike prices in response to the increased tariffs, Bernstein said, but the overall impact on their margins would depend on the price increases and the potential elasticity of the hikes. 

Bernstein rates Apple and Dell as Outperform, and rates HP and IBM as Market-Perform. 

The brokerage noted that U.S. firms faced more potential downside risks from China imposing retaliatory tariffs.