Tariffs or Not, I'm Avoiding These 2 Tumbling Stocks

Timothy Green, The Motley Fool

Tue, Apr 8, 2025, 1:55 AM 4 min read

The Trump administration's sweeping global tariffs and the potential for a spiraling trade war has hit stocks hard. While some bargains will likely emerge from the chaos, investors should choose wisely. Apple (NASDAQ: AAPL) and Wayfair (NYSE: W) were already having multiple issues before Trump took office, and tariffs will only make things worse.

Apple uses Chinese manufacturers to produce most of its devices, along with some partners in India, Japan, South Korea, Taiwan, and Vietnam. With essentially every country hit with some level of tariffs from the Trump administration, that diversification isn't protecting the company.

Tariffs could force Apple to raise its already high prices, reducing demand for its iPhones and other gadgets. However, there were plenty of reasons to avoid the stock even before widespread tariffs were announced.

First, Apple has failed to find a true second act after its iPhone. iPhone sales are flatlining, with revenue from the iconic device down in the quarter that ended Dec. 28, 2024. Apple's Vision Pro headset doesn't look like it's the answer, with the company reportedly scaling back production due to weak demand.

Second, Apple is reportedly struggling to bring useful artificial intelligence (AI) features to its devices. The company has delayed some AI features, including an improved version of its Siri assistant, as it grapples with inconsistent performance. This may not be Apple's fault -- AI models have plenty of limitations -- but these delays certainly won't help the company sell more iPhones.

Third, the $20 billion gravy train from Alphabet's Google could be coming to an end. Google reportedly pays Apple $20 billion annually to make its search engine the default on Apple devices, but an ongoing antitrust suit against Alphabet could upend that deal. Apple's services segment is on a $100 billion annual revenue run rate, but a sizable chunk of that total could vanish if the Google deal falls apart.

Tariffs will only make matters worse for Apple. Buy the dip at your own peril.

Wayfair's business model ultimately boils down to selling cheap foreign-made furniture and household items online. Wayfair depends on Chinese suppliers but also on suppliers in other Asian countries. None of those countries have been spared from the Trump administration's tariffs.

Wayfair stock plunged after the initial tariff announcement, but the stock was already down big from its pandemic-era peak. Wayfair has been struggling with slumping sales over the past few years. While the situation has been stabilizing, tariffs throw a wrench into the company's turnaround.