To say Apple is facing challenges would be an understatement. As it scrambles to catch up in the AI race, the tech giant has also suffered a major setback, losing a landmark court battle to American game developer Epic Games.
Moreover, while CEO Tim Cook expressed his support for newly elected president Donald Trump, his tariff war with China adds to the list of Apple’s woes. Just four days after Trump announced tariffs against Chinese imports, Apple lost $770 billion in market cap.
In the company’s Q2 2025 earnings call, Cook noted that the company anticipates a $900 million additional expense in the ongoing quarter if the 145% tariffs on Chinese imports are implemented. Most of the company’s iPhones still originate from China.
However, Apple’s saviour during this period of uncertainty is India (imports from India are taxed at 26%). “For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin,” said Cook, while adding that the rest of the devices will be assembled in Vietnam.
In collaboration with contract manufacturers, namely Foxconn and Tata, Apple assembled iPhones worth $22 billion in the 12 months that ended in March, as reported by Bloomberg. This represents a 60% increase from the previous year, and now, Apple produces one in five iPhones in India, according to the sources cited by Bloomberg.
In an attempt to prepare for the impending tariffs, Apple chartered cargo flights to ship 600 tonnes of iPhones from India to the United States, according to a Reuters report. The report also noted that the Indian airport authorities reduced the customs clearance time from 30 hours to six hours for the six cargo aircraft carrying iPhones.
Counterpoint research revealed that 16% of the iPhones made for Apple globally last year were assembled in India. The company’s research vice president, Neil Shah, said, “The stars are aligned for India to be the alternative destination to China.”
US-Assembled iPhone 16 Pro Will Cost 25% More
At present, the US government has put a temporary hold on tariffs, including the significant one imposed on China regarding chips, smartphones, and electronic devices. Nonetheless, the forthcoming Section 232 investigation started by the US Department of Commerce could lead to a revised tariff for chips and electronics.
JPMorgan estimates a 20% tariff on iPhone components imported to the US, as reported by Barrons.
Further details of JPMorgan’s analysis were revealed by India Dispatch, which estimates the cost of an iPhone if it were to be assembled in the United States, versus China and India. In addition to the import tariffs on the components, the analysis indicates that assembly costs in the US would double due to rising wage demands and the profit margins of contract manufacturers.
Thus, with a 20% tariff on imported components, the retail price of the iPhone would rise by 30% relative to China.
In contrast, when factoring in assembly costs in India, the effective retail price would only go up by 2% compared to China. The report also compared the price of the iPhone’s bill of materials (BOM) in India and China.
Last month, CNBC reported on an analysis from Wamsi Mohan, a Bank of America Securities analyst, who estimated that the cost of an iPhone 16 Pro could increase by 25%. Mohan attributed the increase solely to labour costs.
But Will China Let It Happen?
There have been several counterarguments. Craig Moffet, a senior analyst at MoffettNathanson LLC, suggests that moving assembly to India may not help, as the components would still originate from China.
This would mean that any resistance from China towards harsh US tariffs would hurt Apple’s plans.
A recent report from The Information reveals that China is hindering Apple’s operations. The country’s authorities have refused to allow one of Apple’s equipment suppliers to export machinery essential for the trial production of the upcoming iPhone 17 to India. Additionally, the report notes that Chinese officials are ‘delaying or blocking’ shipments to India without providing any explanation.
Foxconn, one of Apple’s key manufacturing partners, reportedly observed that approval times for exporting equipment from China to India have increased from two weeks to as much as four months.
Apple is also eagerly waiting for upcoming decisions by the government. “I don’t want to predict the future because I’m not sure what will happen with the tariffs, and there is the Section 232 investigation going on. And so it’s very difficult to predict beyond June,” said Cook in the earnings call, reiterating that given the current proposed tariffs, the company can only estimate $900 million in additional costs for the quarter.
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