Update: The story was updated with BofA analysts' note. 

Shares of Apple (NASDAQ:AAPL) tumbled about 8% premarket on Thursday after President Donald Trump's 'Liberation Day' tariffs were announced on trading partners including China, where the iPhone maker has a large manufacturing presence.

BofA Securities reiterated its Buy rating on Apple, citing resilient margins, cash flows and capitalreturns but lowered the price target on the stock to $250 from $265. The firm noted that China risk is more real, but several outcomes are possible.

Analysts led by Wamsi Mohan said given the news on tariffs, all of Apple’s products will be subject to tariffs at various rates. They expect Apple to manage its supply chain to minimize the impact, but if the tariff rates stand and Apple absorbs the entire $20B of headwind and 500 basis points to gross margins, they expect an impact of $1.24 to EPS in C2026.

The analysts noted that despite the tariff headwinds, they view the 15% potential cut to EPS (without offsets) as attractive compared to the potential global disruption which could be caused by an escalating trade war and view Apple (NASDAQ:AAPL) as relatively defensive.

Mohan and his team said that while the risk of further trade escalation remains, there is also a chance that things could end up better than feared and Apple could use several mitigating strategies including — raising prices on products (in the U.S. and/or globally); pressuring supplychain even more; raising pricing on Services; appeal for exceptions; reoptimize supply chain; and  potentially move away from a cadence of annual product releases.

In addition, the analysts said they have previously estimated that it would cost about 20% more to make an iPhone in the U.S. compared to China. Increased automation and walking away from timed annual product releases to that which are more spread out throughout the year would put less pressure on peak to trough labor costs, according to the analysts.

If all the logistics were theoretically dealt with and some compromises made, it is conceptually possible to move production to the U.S. However, components would still be sourced from Asia for the foreseeable future, the analysts added.

On Wednesday, Trump announced his tariff plans, which would impact key nations in the semiconductor supply chain, including 34% on China, 32% on Taiwan and 24% on Japan.

"Apple (NASDAQ:AAPL), which has built a lot in China, is going to spend $500B to build plants here," Trump said on Wednesday while announcing the tariff plans.

Apple did not immediately respond to a request for comment from Seeking Alpha.

Besides manufacturing in China, Apple also depends upon Taiwan Semiconductor Manufacturing (TSM) for supplying advanced chips.

India — where Apple is bolstering its manufacturing base as it seeks to diversify beyond China — was hit with a 26% tariff. Apple's Taiwan-based manufacturing partner Foxconn Technology (OTCPK:FXCOF), reportedly, plans to make about 25M to 30M iPhones at its facilities in India this year, over double the number it made last year.

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