Apple’s decision to shift iPhone assembly from China to India helped it dodge billions in U.S. tariffs. But with former President Donald Trump suggesting a sharp tariff hike on Indian goods, that strategy now faces serious risk. Trump said on CNBC’s Squawk Box that he may raise tariffs on Indian imports “very substantially” within 24 hours unless India cuts oil purchases from Russia.
If those tariffs rise to 50% and trigger a reciprocal response from India, Apple could take a hit. Analyst Gene Munster estimates the added burden could push tariff-related costs to $2.5 billion per quarter. That’s a $10 billion annual hit, reducing Apple’s operating income by 7%. The incremental damage from such a hike alone could knock off 4% from its bottom line.
Apple moved iPhone manufacturing for the U.S. market to India over the past two years, trying to reduce exposure to tariffs tied to China. The company also now builds most iPads and Macs outside of China, according to CFO Luca Maestri. In the June quarter, 11% of Apple’s overall revenue was exposed to tariffs, which cost the company roughly $800 million. With higher India tariffs starting August 1, that figure is already set to rise.
Apple May Still Avoid the Worst
Despite the numbers, Munster isn’t convinced Apple will face the full brunt of the tariff wave. “Apple’s importance complicates matters,” he said, pointing to the company’s role as a symbol of U.S. innovation and tech leadership. Historically, U.S. administrations have softened tariff policies for companies seen as national champions.
That context matters. Even if the Trump campaign leans hard into protectionist trade talk, the White House has also shown interest in promoting Apple’s U.S. investments. According to Munster, the administration may treat companies like Apple and Nvidia differently when it comes to enforcing higher tariffs. These companies often release U.S. job creation statements or repackage existing efforts as new investments, which the White House views favorably.
In a post breaking down the numbers, Munster shared his estimates:
- 35% of Apple’s revenue comes from the U.S.
- Most products sold in the U.S. are now made outside China.
- The June quarter saw $800 million in tariff-related costs, roughly a 2% hit.
- Starting August, tariffs from India could bring that figure to $1.5 billion per quarter.
- A full 50% tariff scenario could cost $2.5 billion per quarter, or 7% of annual operating income.
Trump’s statement came during a live interview, where he linked tariff escalation to India’s continued oil trade with Russia. The message was clear: raise tariffs unless India changes course.
White House Signals
The administration is expected to highlight another Apple investment in the U.S., a move likely designed to show goodwill. Whether the investment is new or a reframing of previous commitments is unclear, but these gestures have helped Apple maintain a favorable position in past trade disputes.
The threat of higher tariffs is real, but Apple may still find a way through. The company has political weight and economic leverage. If tensions between the U.S. and India escalate, Apple’s best defense may not be in supply chains but in diplomacy. For now, the bark seems louder than the bite.
