Apple Renews Fears About Tariffs, China With Wobbly Report

Bloomberg's Mark Gurman breaks down Apple's wobbly earnings report, the impact of Trump tariffs and what they both mean for the tech giant's future.

Apple Inc.’s much-awaited quarterly earnings report failed to soothe investor concerns about its biggest challenges, including escalating tariff costs and a slowdown in China.

The company’s shares declined 3.7% in New York on Friday after second-quarter results included worse-than-expected sales in China. The iPhone maker also warned that tariffs will increase costs this quarter, a sign that geopolitical tensions are taking a growing toll on the business.

Apple expects $900 million in higher costs from tariffs in the current period, Chief Executive Officer Tim Cook said Thursday during a conference call. Revenue will increase by a percentage in the low- to mid-single digits in the quarter, compared with a 5% average analyst estimate. The company didn’t offer any guidance on the impact of tariffs beyond the current period.

“We will manage the company the way we always have, with thoughtful and deliberate decisions, with a focus on investing for the long term,” Cook said during the call.

Sales from China, meanwhile, fell 2.3% to $16 billion in the second quarter, which ended March 29. Analysts had predicted $16.83 billion. That shortfall is an ominous sign for what was once a growth market.

Apple has lost ground to local phone brands, such as Huawei, Xiaomi and Oppo, and the government there banned foreign-made technology from some workplaces. Apple’s China-centric production also makes it especially vulnerable to tariffs announced by the Trump administration.

The company is struggling in AI as well, especially in China, where its Apple Intelligence platform isn’t yet available. And the brand is increasingly seen as behind the times by consumers in China, where competitors have rolled out foldable devices.

Apple is preparing to launch its AI services in China in the coming months — relying on partners Alibaba Group Holding Ltd. and Baidu Inc. — and a foldable iPhone is due next year.

As part of the quarterly report, the company announced plans to increase its share buyback program by $100 billion and boost the quarterly dividend 4% to 26 cents a share.

Apple shares are now 18% this year. With Friday’s decline, the company has fallen back below Microsoft Corp. as the world’s most valuable business.

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