Apple Explains How It’s Trying to Keep iPhone Costs Down Amid Tariff Uncertainty

Apple CEO Tim Cook warned investors that, assuming no new duties are added, the company expects Trump’s tariffs to increase its costs by $900 million during Q2, ending in June. 

Apple has long relied on Chinese manufacturers to build the iPhone. Although Trump exempted smartphones from his extra 125% tariff on Chinese imports, the devices still face another 20% duty. But in some good news for consumers, Cook told CNBC that Apple is already sourcing over half of US iPhones from factories in India, a country that’s been spared from most of Trump’s reciprocal tariffs. Instead, iPhones shipped from India only face a 10% import fee. 

“For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin,” Cook said in a Thursday earnings call. Most iPads, Macs, and Apple Watch devices sold in the US will come from Vietnam. “China would continue to be the country of origin for the vast majority of total product sales outside the US,” Cook adds. 

Nevertheless, Apple estimates it’ll pay $900 million in import fees in the June quarter since it still sources some inventory from Chinese manufacturers. Cook noted that Trump’s cumulative 145% tariff for other Chinese imports can hit some Apple accessories and repair components made in the country. 

Although the $900 million estimate is a lot of money, Apple raked in $95.4 billion in revenue during Q1. Still, Cook noted that the Trump administration is weighing imposing additional duties on Chinese-assembled phones and computers as part of its tariffs focused on semiconductors. 

For now, Cook said he had nothing to share about potential price increases. He added that Apple faced “limited impact” from the tariffs at the end of Q1 in March since the company was able to “optimize” its supply chain, a sign that the company rerouted more orders from India. 

About Michael Kan

Senior Reporter

I’ve been working as a journalist for over 15 years—I got my start as a schools and cities reporter in Kansas City and joined PCMag in 2017.

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