Apple Faces $900 Million Hit from Tariffs as iPhone Production Shifts to India
Apple could incur an additional $900 million in costs this quarter due to tariffs, CEO Tim Cook revealed on Thursday, marking one of the company’s most significant financial impacts yet from escalating trade tensions under former U.S. President Donald Trump’s economic policies.
Speaking during the company’s quarterly earnings call, Cook said the estimated cost increase assumes no change in current global tariff policies through the end of the quarter. To mitigate the financial strain, Apple is accelerating a major shift in its global supply chain – relocating iPhone production for the U.S. market from China to India.
“Given the existing tariffs and risks in the supply chain, we anticipate the majority of iPhones sold in the United States will soon be manufactured in India,” Cook said.
Apple has relied heavily on China for iPhone assembly, with about 90% of its production historically based there. However, the Trump administration’s sweeping 145% tariffs on Chinese goods, and a baseline 20% levy on China-made electronics not exempted under reciprocal policies, have forced the tech giant to diversify.
Despite recent exemptions for semiconductor-based electronics, the broader impact of tariffs remains significant. Cook emphasized the need to reduce reliance on any single country, calling it a “supply chain risk.”
Apple’s stock slid nearly 4% in after-hours trading following the call, as investors reacted to the financial headwinds and operational uncertainties. While India will take the lead on U.S.-bound iPhones, Cook noted that China will continue producing most Apple products for international markets. Meanwhile, Vietnam is becoming the primary manufacturing hub for iPads, Macs, Apple Watches, and AirPods destined for the U.S.
The shift in supply chain strategy comes as Apple faces rising competition in China, its second-largest market. Sales in the Greater China region – including Hong Kong and Taiwan – dropped 2% year-on-year to $16 billion, reflecting pressure from local smartphone brands.
Nevertheless, Apple posted stronger-than-expected earnings for the January–March quarter, with total revenue climbing 5% to $95.4 billion. iPhone revenue rose modestly by 2% to $46.8 billion.
Cook acknowledged that the company had so far managed to limit the impact of tariffs through careful supply chain planning. However, looming threats of additional levies and geopolitical instability could challenge that strategy in future quarters.
While Trump has pressed for iPhone production to return to U.S. soil, analysts remain skeptical. Wedbush Securities estimates that domestic iPhone manufacturing could raise retail prices to over $3,000 per device.
Earlier this year, Apple announced a $500 billion investment over four years – an initiative Trump hailed as a manufacturing win. But most of that funding is earmarked for AI infrastructure and educational programs, not hardware assembly.
As trade policies continue to evolve, Apple’s latest move signals a broader industry trend: adapting global production footprints to protect profits in an increasingly protectionist world.
