• Apple expects a $900 million tariff hit this quarter as it shifts US iPhone production from China to India amid trade tensions 
• Tim Cook says the majority of US-bound iPhones will have India as the country of origin, with Vietnam producing iPads, Macs and other devices

Apple’s recent confirmation of a $900 million tariff impact this quarter underscores the ongoing challenges in global technology supply chains amid shifting trade policies. The tech giant reported first-quarter profits above expectations, but warned that US tariffs could cost the company and disrupt its supply chain. This financial hit comes as Apple diversifies its manufacturing base away from China.

During Apple’s recent earnings call, CEO Tim Cook outlined the company’s approach to managing these tariff pressures. Cook stated that while the tariff impact was “limited” at the start of this year, the company expects US tariffs to cost $900 million in the current quarter. He emphasised the difficulty in making precise predictions due to policy uncertainties.

“We are not able to precisely estimate the impact of tariffs, as we are uncertain of potential future actions before the end of the quarter,” Cook said. “Assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs.”

Supply chain realignment

The Cupertino-based tech giant is actively reconfiguring its manufacturing footprint, with India gaining prominence. Cook said he expected “a majority of iPhones sold in the US will have India as their country of origin,” adding that Apple’s products were exempt from Trump’s most severe “reciprocal” tariffs, for now.

This manufacturing shift represents a significant change for Apple, which has traditionally relied heavily on China. According to reports, Apple already manufactures one in five of its iPhones in India, generating US$22 billion in revenue during the 2024-25 financial year alone. The company expects to import most US-bound iPhones from India by the end of next year.

Analysts note that short-term uncertainties remain. As CNBC reported, Cook was reluctant to make predictions beyond June: “I don’t want to predict the future because I’m not sure what will happen with tariffs,” he said, adding, “it’s very difficult to predict beyond June.”

Multi-country production strategy

Vietnam has also emerged as a key production hub in Apple’s diversification strategy. Cook said Vietnam would be the country of origin for almost all iPad, Mac, Apple Watch, and AirPod products sold in the US. Meanwhile, China will continue to be where most Apple products are made for sale outside the US.

While this approach helps mitigate immediate tariff risks, challenges remain. Both Vietnam and India could potentially face higher tariffs on imported goods by July. Trump previously targeted both countries under his “reciprocal tariffs” announced in April, though these were subsequently paused for 90 days.

Financial performance and market response

Apple’s revenue of US$95.4 billion in the recently ended quarter was driven by iPhone sales, with the company taking in US$17 billion in the China market. Profit for the quarter was US$24.8 billion. However, the market reaction was mixed.

Apple shares slipped more than 3% in after-market trading, highlighting investor concerns about the company’s ability to navigate ongoing tariff uncertainties—despite financial results that exceeded Wall Street expectations.

A ‘Make in India’ opportunity?

The current trade environment presents potential opportunities for India’s manufacturing sector. “Apple proactively built up inventory ahead of anticipated tariff policies,” said Canalys research manager Le Xuan Chiew. “With ongoing fluctuations in reciprocal tariff policies, Apple is likely to further shift US-bound production to India to reduce exposure to future risks.”

This shift aligns with India’s broader manufacturing ambitions, though significant hurdles remain. According to Emarketer analyst Jacob Bourne, Apple’s plan to shift manufacturing to India “raises pressing questions about execution timeline, capacity limitations, and potentially unavoidable cost increases that will shrink margins, be passed to consumers, or have a mix of consequences.”

Vinod Sharma, chairman of the Confederation of Indian Industry’s Committee on Electronics Manufacturing, acknowledged the opportunity but cautioned: “We certainly have a clear advantage. But it would be foolish to think that this opportunity alone will sail us through.” He stressed that policy shifts would be needed to realise the potential gains.

Ongoing challenges

Despite progress in diversifying its manufacturing base, Apple faces significant challenges. A production-linked incentive program introduced in India in 2020, with an outlay of US$23 billion, aimed to raise manufacturing’s share of India’s gross domestic product to 25% by 2025. As of March, the sector’s contribution was 14.3%.

“We have a complex supply chain, there’s always risk in the supply chain,” Cook told analysts. “What we learned some time ago was that having everything in one location had too much risk with it.”

As trade tensions evolve, Apple’s strategic pivot represents both a significant operational challenge and a test of the company’s supply chain expertise. For India, this shift offers an opportunity to increase its role in global electronics manufacturing networks—but success will depend on addressing persistent infrastructure and policy limitations that have historically constrained its manufacturing competitiveness.