Apple Faces 25% U.S. Tariff Threat Amid Expansion of iPhone Manufacturing in India
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U.S. Tariff Threat Challenges Apple's India Manufacturing Strategy
On May 23, 2025, U.S. President Donald Trump announced plans to impose a 25% tariff on iPhones manufactured outside the United States, including those assembled in India. This move directly challenges Apple's ongoing strategy to shift a significant portion of its iPhone production to India, aiming to reduce reliance on Chinese manufacturing and mitigate existing tariffs.
President Trump emphasized that Apple must produce iPhones domestically to avoid the proposed tariff, stating, "I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else."
In response to these developments, Apple's stock experienced a decline of approximately 3%, reflecting investor concerns over potential cost increases and supply chain disruptions.
Apple's Manufacturing Expansion in India
Despite the tariff threat, Apple continues to expand its manufacturing footprint in India. The company's primary supplier, Foxconn, has announced a $1.5 billion investment in a new display module assembly facility near Chennai, Tamil Nadu. This plant is expected to supply critical components for iPhones and generate approximately 14,000 jobs.
India currently accounts for about 18% of global iPhone production, a figure projected to rise to 32% by 2025. Apple aims to manufacture all iPhones sold in the U.S. from Indian facilities by the end of 2026.
Economic Considerations: India vs. U.S. Manufacturing
Analysts indicate that even with a 25% tariff, manufacturing iPhones in India remains more cost-effective than producing them in the U.S. The assembly cost per iPhone in India is approximately $30; adding a 25% tariff increases this to $37.50. In contrast, assembling the same device in the U.S. would cost around $390.
Transitioning iPhone production to the U.S. would require significant investment and time. Estimates suggest that shifting just 10% of Apple's supply chain domestically could cost $30 billion and take approximately three years. Moreover, such a move could raise the retail price of high-end iPhones to around $3,500, potentially impacting consumer demand.
Vijay Sales Launches 'Apple Days' Sale Amidst Tariff Concerns
In India, electronics retailer Vijay Sales has initiated its 'Apple Days' sale, offering significant discounts on various Apple products, including the iPhone 16 series, iPads, MacBooks, Apple Watches, and AirPods. The sale runs from May 24 to June 1, 2025, across all Vijay Sales outlets and online platforms.
Key Offers:
- iPhone 16 (128GB): ₹66,990 (MRP ₹79,900)
- iPhone 16 Plus (128GB): ₹74,990 (MRP ₹89,900)
- iPhone 16 Pro (128GB): ₹1,03,990 (MRP ₹1,19,900)
- iPhone 16 Pro Max (256GB): ₹1,27,650 (MRP ₹1,44,900)
- iPhone 16e (128GB): ₹47,990 (MRP ₹59,900)
Additional benefits include instant discounts of up to ₹4,000 for customers using ICICI, Axis Bank, or Kotak Mahindra Bank cards, as well as exchange bonuses on eligible smartphones.
Outlook
Apple's strategic shift to Indian manufacturing aligns with its goals to diversify its supply chain and reduce dependency on Chinese production. However, the proposed U.S. tariffs introduce new challenges, potentially affecting cost structures and market dynamics. While manufacturing in India remains economically advantageous, the evolving trade policies necessitate careful navigation to maintain profitability and market share.
