Apple Faces $900M Tariff Hit, Shifts iPhone Production to India

Apple CEO Tim Cook revealed on Thursday that President Trump’s 145% tariffs on Chinese imports would cost the company $900 million this quarter which led to a major iPhone production relocation from China to India. During the earnings call Cook announced that most U.S. iPhone sales will originate from India while Vietnam will supply iPads Macs Apple Watches and AirPods. The production of products for non-U.S. markets will continue to come from China.

The smartphone tariff exemption does not protect Chinese-made products from a 20% tariff rate according to Cook. The stock price of Apple declined by 4% during after-hours trading because investors worried about supply chain vulnerabilities and tariff consequences. The Wedbush Securities analysis shows that 90% of iPhone manufacturing continues in China so the company needs to diversify its operations. The company aims to decrease its dependence on one location to protect itself from potential risks.

The first quarter revenue of Apple reached $95.4 billion which exceeded market predictions by 5% while iPhone sales increased by 2% to $46.8 billion. The sales in Greater China decreased by 2% to $16 billion because of rising competition in the local market. The Wedbush analysis shows that domestic iPhone manufacturing would result in a price increase to $3,500. The $500 billion investment by Apple for AI servers and training avoids domestic iPhone manufacturing but supports tariff avoidance plans.