By Tae Kim
U.S. computer hardware makers face potentially "calamitous" damage from President Donald Trump's newly announced tariffs on dozens of countries, Morgan Stanley says.
Late Wednesday, Trump announced high so-called reciprocal tariff rates on Asian nations, including 34% on China, 46% on Vietnam, and 26% on India, effective on April 9. The aggregate rate for China could be as high as 79% when adding in tariffs Trump had already imposed on the country.
Technology hardware analyst Erik Woodring said Apple, Dell Technologies, and HP Inc. are among the "worst positioned" of the companies he covers because of their reliance on manufacturing and assembly in Asia.
"Reciprocal tariffs are calamitous to IT hardware given nearly all hardware products sold in the U.S. are now subject to 25%-54% import tariffs (including iPhones)," Woodring wrote Thursday in a note titled "Nowhere to Hide."
The analyst estimates the added cost of tariffs will cost Apple more than $33 billion a year, or 26% of its fiscal 2025 operating profits. He also says the tariff costs could equal almost the entire estimated net profit for Dell and HP this year.
Apple and HP didn't immediately respond to requests for comment on the report. A Dell spokesperson sent this statement: "We are reviewing and assessing the impact of the tariffs announced yesterday. Dell has a strong track record of leading through any environment with our globally resilient and agile supply chain."
In early trading Thursday, Apple, Dell, HP shares were down 9%, 16%, and 17%, respectively.
"Hardware companies have few mitigation tools at their disposal to offset these tariffs," Woodring wrote. He said he expects higher prices for customers as a result.
Most of the world's technology products are made in Asia, including smartphones, computers, videogame consoles, and big-screen TVs. Apple, in particular, relies on the contract manufacturer Foxconn to make the vast majority of its iPhones in China.
The only potential "silver lining" would be if the companies can convince the Trump administration to lower the tariff rates before they take effect, the analyst said.
Write to Tae Kim at tae.kim@barrons.com
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April 03, 2025 11:37 ET (15:37 GMT)
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