The US administration is convinced that Apple, one the biggest and most valuable brands in the world, can and should move its manufacturing infrastructure to the US. The reality, however, is far murkier. Let’s dissect what puts Apple in a precarious situation and how it might hope to manage through this volatility.

Apple is in the spotlight — and in a tough spot.

Apple is one of the few major tech companies with a significant hardware business, making it much more exposed to the tariff situation. As a marquee brand, and one of the most valuable in the world, Apple is often referenced by the administration. What it does — or chooses not to do — is always under scrutiny.

Although Apple has long been following a “de-risk China” strategy, moving production out of that country and diversifying to India and Vietnam, the bulk of its supply is still tied to China, which faces ever-escalating tariffs. Unfortunately, this is also a double whammy for Apple because, as tensions escalate with China, it jeopardizes one of its major markets for iPhones, where it’s already struggled to grow in the face of fierce competition.

Apple has wiggle room.

As a company with lucrative margins on its devices, Apple can absorb some of the tariff-induced cost increases without significant financial impact, at least in the short term. In addition, its services business, which is even more profitable than its devices, can provide an additional buffer to the margin impact.

Apple is also uniquely positioned to pass on a reasonable chunk of the price increase because it has built a price moat around itself with exceptional brand equity and customer experience. The brand commands better loyalty than its competitors, and it is unlikely that a manageable price increase will send these customers fleeing into the arms of Android-based competitors.

Apple’s best bet is to hedge.

Apple has announced plans to invest $500 billion in the US over the next four years, but I predict that it will rather adopt a wait-and-watch approach, hedging bets and saying more while doing less.

The primary reason for this is the extreme volatility surrounding these policies. If the tariffs prove to be merely negotiating tactics, then they could be temporary. Even if that were not true, given how far this trade policy is from historical precedent (irrespective of the party in power), it is highly likely that it will be reversed in the future. Making comprehensive changes to the manufacturing footprint is difficult, expensive, and time-consuming; undoing those changes would be just as challenging.

In such a volatile environment, Apple will be loath to take drastic action that is hard to do and harder still to undo.

—–

To better manage your brand and business through this period of uncertainty and shifting consumer behaviors, please read our report, Consumer Marketing, CX, And Digital Leaders: How To Thrive Through Volatility (US).

If you are a Forrester client, stay tuned for additional research on how CMOs can better manage uncertainty and volatility. Go to my Forrester bio and click “Follow” to be notified.

Also, as a client, you can schedule time with me for an inquiry or guidance session, or talk to your account team about workshops and strategy days on planning through uncertainty.