Apple avoids tariff hit on iPhones, but China threat remains - Media

Trump’s proposed 125% tariff on China-made goods posed a major threat to Apple’s supply chain, echoing the disruptions experienced during pandemic lockdowns. However, on Friday evening, the US president delivered Apple a major win by exempting a wide range of consumer electronics — including iPhones, iPads, Macs, Apple Watches, and AirTags — from the tariffs. A separate 10% import duty on products from other countries was also lifted.

Although a new “sectoral tariff” on semiconductor-related goods may still be introduced and the existing 20% China-specific tariff remains in effect, analysts view the decision as a major victory for Apple and the broader consumer tech industry, which still relies heavily on Chinese production.

“This is a major relief for Apple,” Evercore ISI analyst Amit Daryanani said in a note on Saturday. “The tariffs would have driven material cost inflation.”

India as backup plan

Ahead of the tariff exemptions, Apple had already prepared a contingency plan — shifting some iPhone production for the US market to India. With its local facilities now capable of producing over 30 million iPhones annually, Apple hoped this would help meet domestic demand and cushion the blow from the proposed tariffs.

Apple sells between 220 and 230 million iPhones annually, with roughly a third going to US consumers. However, moving large-scale production to India would have been complex, especially with iPhone 17 production — mostly scheduled for China — already ramping up. Internally, teams grew concerned about the tariffs’ potential impact on the fall launch of the new lineup, creating widespread uncertainty.

Quickly transferring iPhone 17 production to India or elsewhere would have been a monumental task. It could have raised retail prices and forced Apple into difficult supplier negotiations. Marketing teams would also have had to reassure consumers.

For now, relief is setting in - but uncertainty remains, as US trade policy could shift again, requiring Apple to consider more radical supply chain restructuring.

Tensions with China

Another concern is potential retaliation from China over Apple’s production shift. Apple earns about 17% of its revenue from China and operates dozens of stores there - making it uniquely vulnerable among US tech giants.

Beijing has already launched antitrust probes into American firms and may impose new customs barriers. In recent years, it banned iPhones and other US devices among government workers, responding to Washington’s sanctions against Huawei.

iPhone production remains deeply rooted in China. According to Morgan Stanley, about 87% of iPhones, 80% of iPads, and 60% of Macs are assembled there. The US accounts for 38% of iPad sales and around half of Apple’s Mac, Watch, and AirPods revenue.

Completely decoupling from China is unlikely in the short term. While Trump continues to urge Apple to bring iPhone manufacturing to the US, a lack of skilled labor and production infrastructure makes this scenario infeasible.

China’s unmatched scale and speed of production are vital to Apple’s global sales. Roughly 60% of the company’s revenue comes from outside the US.

Apple and other companies argue that relocating final assembly to the US is economically impractical. Instead, they urge the government to focus on high-value job creation and boosting semiconductor investment.

Tariff risks and lobbying success

After Trump’s latest tariff announcement on April 2, tech lobbyists intensified efforts to secure exemptions.

The stakes rose further as US-China tit-for-tat moves pushed total import duties on Chinese goods to 145%.

Relief came when the administration suspended tariff hikes on dozens of other countries — potentially handing non-Chinese manufacturers like Samsung an edge. But on Saturday, April 12, it was confirmed: smartphones and computers were exempted from Trump’s reciprocal tariffs.