President Trump's Tariffs Could Cost Apple Nearly $1 Billion. Is It Time to Sell the Stock?

President Donald Trump's tariff plans will hurt some companies while helping others. Apple (NASDAQ: AAPL) is one that is getting hurt, as the tariffs are expected to cost Apple $900 million during its next quarter. Losing that much money is a big deal for some companies, while others can handle a hit like that.

Apple is among the ones that can easily take that blow, but is the stock still worth owning right now with tariff uncertainties?

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Apple's net income growth will be nearly zero after the tariff headwinds

First, let's take a look at the $900 million. At the end of second-quarter fiscal year 2025 (ending March 29), Apple has $48 billion in cash and marketable securities on its balance sheet, which is more than enough to eat that expense. However, these costs will likely show up in Apple's net income. During Q2, Apple generated $24.8 billion in net income. If we assume that this $900 million headwind came in this quarter, that would have resulted in a 3.6% reduction in net income.

While that may not seem like a large percentage decrease, it eats almost all of Apple's growth. During Q2, Apple's net income only rose $1.2 billion year over year, so this headwind will likely cause its net income growth to hardly exist at all.

This is a problem because Apple is already valued as if it were a double-digit growth stock.

Apple's expensive stock doesn't make sense to own in this environment

Although Apple may have been a cheap stock when Warren Buffett started buying it up in 2016, that's no longer the case. Now, Apple is one of the most expensive stocks in the market among the big tech companies.

AAPL PE Ratio data by YCharts.

Although it's cheaper than it was just a few months ago, 32 times trailing earnings and 28.5 times forward earnings tell investors that the stock should be putting up strong growth. But we know that it isn't.

Apple's revenue rose 5% in Q2. Although that's one of the better quarters in recent history, it's still not very impressive.

AAPL Operating Revenue (Quarterly YoY Growth) data by YCharts.

Investors need to ask themselves: Are there more promising stocks than Apple? The answer to that is, unequivocally, yes.

Apple has some real headwinds coming up. It's working on moving production of iPhones to India and starting up U.S. production facilities. There's a reason why those phones were made in China in the first place, and it all has to do with the production costs. It was the most profitable way to make iPhones, but with the shifting economic landscape, Apple is being forced to move that production elsewhere. This will cause the $900 million headwind CEO Tim Cook was talking about, but it could also cause further issues down the road.

Additionally, if the U.S. economy starts to face a downturn, people will not have the cash to spend on the latest iPhone or other Apple gadget. This could cause further pressure on Apple's already slow sales. While this trend will likely affect nearly every company in the U.S., some of those alternative companies already have meaningful growth to offset the headwind that a slowing economy would create.

Apple isn't a stock that I'd want to own in this environment, as it has significant foreign exposure, slow sales growth, a premium valuation, and a product that requires significant disposable income to purchase. Plenty of other stocks may only have one of those headwinds approaching, and I'd rather own those than hold Apple shares.

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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.