Apple Inc. is adjusting its supply chain strategy by increasing iPhone production in India in response to new tariffs imposed by US President Donald Trump.
According to a Tuesday Wall Street Journal exclusive, Apple’s short-term remedy to the tariffs is to sidestep the 54% additional tariffs on Chinese goods by moving its business to India. However, sources familiar with the matter said the company is also seeking an exemption from the tax through Apple CEO Tim Cook’s relationship with the Trump administration.
The sources also said that moving production to India is a necessary stopgap for Apple. Still, Cook and his team believe it is a temporary solution because the company hesitates to make long-term changes to its supply chain, which relies heavily on China.
Trumpian market tariffs partially force Apple out of China
The new tariff package, revealed by Trump last week, raises levies on Chinese goods to at least 54% but imposes a 26% tariff on imports from India, which is a much lesser headache to deal with.
As reported by Cryptopolitan on Monday, Trump threatened to increase these tariffs if China does not remove the retaliatory duties imposed last Friday in response to US tariff plans revealed on April 2.
Apple now wants to diversify its supply chain but is carefully weighing the risks of overhauling its manufacturing model, which is a costly choice in the long run.
Spooked investors have sold off their Apple equities based on the technology firm’s reliance on Chinese manufacturing, leading to a 19% decline in its shares, marking its worst three-day performance in nearly 25 years.
The tariffs on Chinese-made goods could add approximately $300 to the manufacturing cost of an iPhone 16 Pro, which currently retails for around $1,100.
According to Bank of America analyst Wamsi Mohan, Apple was already on track to produce 25 million iPhones in India this year, with approximately 10 million units allocated for the local Indian market. If Apple redirected all its India-made iPhones to the US, it could meet about 50% of the American demand for the device in 2025.
Apple’s facing an estimated $39.5 billion in tariff costs
Since 2017, Apple has steadily increased its production in India, working with local partners to assemble iPhones. The company’s efforts were focused on older iPhone models but have since expanded over time to include the latest versions.
The manufacturing model helps Apple water down the risks associated with China’s supply chain and allows the company to avoid heavy tariffs when selling in India, slated as one of the world’s fastest-growing smartphone markets.
It is costly and time-consuming to shift production
Apple’s manufacturing efforts remain largely centered in China, and it would take a considerable amount of time for the company to shift its production operations to India. One of its major manufacturing partners, Foxconn, operates several facilities in China that assemble over 500,000 iPhones in a day, according to Silicon Business UK data.
The iPhone accounts for about 50% of Apple’s annual revenue, so it’s undoubtedly part of the biggest reasons why the company has to respond to these tariffs.
“Apple’s supply chain in China runs deep: over 1.5M factory workers. To replicate that in the US, they’d need to build and scale 75 mega-factories, each 2–4x larger than average, and somehow find workers in the middle of a 1.7M blue-collar labor shortage. This isn’t just difficult. It’s impossible in the short term,” argued one tech enthusiast on X.
Moving iPhone production to the US, an event President Trump would want his legacy to include, is being discussed, although not supported by analysts. Wedbush, a research firm, told WSJ that manufacturing iPhones in America would result in costs far beyond the tariff price.
“If consumers want a $3,500 iPhone, we should make them in New Jersey or Texas,” he remarked.
Global manufacturing affected by tariffs
On a much larger scope, influenced by Trump tariffs, Apple’s global manufacturing has been affected in other countries where it has been diversifying production.
The phone manufacturer moved some of its production to Vietnam, Malaysia, Thailand, and several other Asian nations. Under the new tariff plan, Vietnam faces a 46% tariff on Apple goods, including AirPods and iPads, while Malaysia, Thailand, and Indonesia face rates of 24%, 37%, and 32%, respectively.
These changes in global manufacturing hubs mean that efforts to reduce its dependence on China may be enough to protect it from the full impact of the new tariffs.
Still, Apple is supposedly investing in US manufacturing. In February, the company announced plans to invest more than $500 billion over the next four years in American-based production, including purchasing advanced chips from Taiwan Semiconductor Manufacturing’s new Arizona facility.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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