China is no longer the primary manufacturing location for iPhones intended for the US market. India has surpassed China as the leading producer of iPhones for export to the United States. After US President Donald Trump imposed high tariffs on China, Apple decided to reorganize its supply chain. With first-quarter profits that are still higher than anticipated, Apple has so far been able to lessen the effects of tariffs. The business did, however, issue a warning that its supply chain might be disrupted in the future by the global tariff war.
Despite their limited impact earlier this year, Apple anticipates that US tariffs will cost the company about $900 million in the current quarter, CEO Tim Cook stated during an earnings call.
Cook also mentioned that Apple is moving a significant portion of its production to India, stating, "We expect the majority of iPhones sold in the US to be manufactured in India." He added that Apple's products are currently exempt from the most severe retaliatory tariffs imposed under former President Trump's trade policies."
We are not able to precisely estimate the impact of tariffs, as we are uncertain of potential future actions prior to the end of the quarter," Cook said.
"Assuming that current global tariff rates, policies, and applications do not change for the remainder of the quarter and no new tariffs are added, we estimate that the impact will be $900 million to our costs."
Although China continues to be the main supplier of iPhones to the US, market research firm Canalys reports that production in India rose sharply toward the end of the quarter.
Nearly all iPads, Macs, Apple Watches, and AirPods sold in the US will soon be imported from Vietnam, according to Apple CEO Tim Cook. He did clarify, though, that the main production location for Apple goods sold outside of the US will still be China.
Strong iPhone sales were a major factor in Apple's most recent earnings report, which showed quarterly revenue of $95.4 billion. With a total profit of $24.8 billion, the company reported $17 billion in revenue from China alone. In after-hours trading, Apple's stock dropped more than 3% despite the impressive performance.
