Tariff-Sensitive Stocks Apple and Nike Are Getting Clobbered. Time to Buy?

Daniel Foelber, The Motley Fool

Sun, Apr 13, 2025, 3:12 PM 6 min read

Tariffs are rattling markets and leading to spikes in volatility. Growth-focused sectors like technology and consumer discretionary are particularly vulnerable given their cyclicality and global exposure.

Apple (NASDAQ: AAPL) and Nike (NYSE: NKE) are down over 20% year to date at the time of this writing, significantly underperforming the S&P 500 and Nasdaq Composite, which are also down significantly. Here's why both stocks are selling off and whether they are worth buying now.

There's no sugarcoating Apple's exposure to tariffs, especially in China. China is a key market for Apple -- both from a manufacturing and a sales perspective.

After Apple stock surged on April 9 in response to a 90-day pause on reciprocal tariffs to all countries except China, it sank 4% the following day on news that the tariff rate on Chinese goods would be raised to a staggering 145%. If it sticks, that steep of a tariff rate would crush Apple's near-term profitability. That's why the stock is down so much year to date.

Buying Apple stock now is a belief that two things will happen:

1. Apple will be able to adjust its supply chain to avoid the brunt of tariffs, or tariffs will ease.

2. Apple will be able to pass along higher costs to consumers.

On April 10, reports indicated that Apple was flying iPhones from India to the U.S. to circumnavigate tariffs on China. If Apple feels China could be a longer-term risk, it could work to permanently shift manufacturing out of China toward India and other partners in Southeast Asia. However, investors may want to wait for Apple's upcoming earnings call on May 1 to better understand how the company plans to reduce the tariff impact.

As for Apple's pricing power, iPhone growth has slowed in recent years. But the company has made up for some of that slowdown by growing its high-margin services segment and repurchasing stock to grow earnings per share. Entertainment services include Apple TV+, Apple Music, Apple Podcasts, Apple Books, and more. Apple also has a growing list of financial services, from Apple Pay to Apple Card and Apple Cash.

Apple has yet to make as big a splash in artificial intelligence as some investors may have hoped for, so there are fears that it lacks the pricing power it once had. However, services have enhanced the breadth of the Apple ecosystem.

All told, Apple stands out as a solid buy if you believe in its ability to navigate supply chain challenges and its pricing power. But it's also reasonable to take a wait-and-see approach until investors get more clarity on Apple's response to tariffs from the earnings call in a few weeks.