Apple (AAPL) crushed second-quarter earnings with $95.4 billion in revenue and $24.8 billion in profit, but the bigger headline was CEO Tim Cook’s warning: even Apple can’t outrun Trump’s trade war.
Because of tariffs, Apple expects to lose $900 million every quarter. As Spencer Hakimian, analyst and founder of Tolou Capital Management, put it bluntly:
“The best-run company on earth. That got a custom-made exemption for its product category from the tariffs. That already has full alternative supply chains up and running in India and Vietnam. That has months of inventory ready to go. That company just told you they're going to lose $1 billion per quarter from these tariffs.”
Apple, with production in more than 50 countries, over $500 billion in planned U.S. investments, and a cash pile exceeding half a trillion dollars, is arguably better positioned than any other firm to navigate trade friction.
And yet, it still expects to take a near-billion-dollar hit every three months. That doesn’t bode well for companies without Apple’s scale, supply chain flexibility, or political influence.
Cook’s warning also shatters the once-popular belief that moving production out of China would protect companies from U.S. tariffs.
As he noted, most iPhones sold in the U.S. will eventually be made in India, which is no longer tariff-exempt. “So how bad do you think it’s going to get for the average American business?” Hakimian asked.
Lose-lose scenario for everyone else
Apple may be able to absorb the blow. Most public companies can’t.
According to Goldman Sachs, Trump’s proposed tariffs could shave 2% to 3% off S&P 500 earnings per share this year. Goldman’s chief U.S. equity strategist, David Kostin, says every 5-point hike in tariffs tends to cut earnings by about 1% to 2%.
And for companies, it’s a lose-lose scenario.
“If management teams absorb the higher input costs, profit margins get squeezed,” Kostin said. “If they pass those costs to customers, sales volumes may decline.”
The term “tariff” came up in 259 S&P 500 earnings calls last quarter — the highest in at least a decade. That number is expected to rise again this quarter as executives face renewed pressure from shareholders and markets alike.
According to S&P Global Ratings, the sectors most vulnerable to tariffs are those with deep cross-border supply chain ties, particularly across North America.
For much of Corporate America, there’s no easy workaround, and the real impact of tariffs is yet to be seen.
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