06:36 AM EDT, 04/07/2025 (MT Newswires) -- US President Donald Trump's latest reciprocal tariffs pose major challenges for Apple ( AAPL ) and Tesla (TSLA) as the duties are likely to create cost and demand headwinds for the companies, Wedbush Securities said.

Last week, the Trump Administration announced sweeping new tariffs on several countries, including China, which responded with its own retaliatory tariffs of 34% on US products.

In two separate Sunday client notes, Wedbush cut its 12-month price target on Apple ( AAPL ) to $250 from $325 and lowered its estimate on Tesla to $315 from $550. The brokerage maintained its outperform ratings on each stock. Shares of the iPhone maker were down 2% in Monday's premarket activity, while the electric vehicle giant's shares dropped 4.5%.

Wedbush labeled the new tariffs as an "economic Armageddon" with potentially disastrous implications for Apple ( AAPL ) due to its substantial production exposure in China. The brokerage believes no US tech company is more negatively affected by these duties than Apple ( AAPL ), which produces and assembles 90% of its flagship iPhone product in the key China region.

The current tariff situation is "dramatically different" from the macroeconomic uncertainty caused by the COVID-19 pandemic in 2020 and is expected to be devastating to Apple ( AAPL ), its cost structure and consumer demand, Wedbush analysts led by Daniel Ives said. The uncertainties caused by Trump's new tariffs will lead to demand destruction amid heightened recession fears, while the price consequences are "hard to grasp and model," according to the brokerage.

The tech giant's supply chain is established in Asia, even though it has made efforts to diversify production to other countries. In February, Apple ( AAPL ) unveiled plans to spend more than $500 billion in the US, but Wedbush estimates it would take three years and $30 billion for the iPhone maker to move even 10% of its supply chain to the country from Asia.

"For US consumers the reality of a $1,000 iPhone being one of the best made consumer products on the planet would disappear," Ives wrote in the note. "Price points would move up so dramatically it's hard to comprehend and the near-term margin impact on Apple's ( AAPL ) gross margins during this tariff war could be mind boggling."

Wedbush believes that Tesla is less exposed to tariffs than other automakers, but the company still imports a considerable amount of parts and batteries from outside the US, including China. The tariffs are set to have a "clear" cost impact on the EV maker in the US that can ultimately be passed on to consumers in the form of higher prices, hurting demand.

"The bigger worry in our opinion is Tesla's success in China as this key region is the linchpin to the future success of Tesla," according to Ives. "The backlash from Trump tariff policies in China and (Chief Executive Elon Musk's) association will be hard to understate and this will further drive Chinese consumers to buy domestic."

Musk's role within the Trump administration has also created a "brand crisis" at Tesla, with the company becoming a political symbol over the past few months, Wedbush said.

Last week, the automaker posted sharp declines in first-quarter deliveries year over year and sequentially, missing market expectations estimates, amid demand weakness in key markets.