Apple eyes India as iPhone tariff fix

Apple plans to send more iPhones to the US from India to offset the high cost of China tariffs.

An employee is pictured inside an Apple store in Mumbai. Picture: AFP.

Apple plans to send more iPhones to the US from India to offset the high cost of China tariffs.

The adjustments are a short-term stopgap while Apple ­attempts to win an exemption from US President Donald Trump’s tariffs, which chief executive Tim Cook obtained during the first Trump administration. The company sees the current situation as too uncertain to up-end long-term investments in its supply chain, which is centred around China.

Mr Trump’s new tariff package raises levies on Chinese goods to at least 54 per cent while imposing a 26 per cent rate on Indian goods. On Tuesday, Mr Trump threatened to add to China tariffs if the country doesn’t remove the retaliatory duties it announced after US tariff plans were revealed on April 2.

The iPhone is Apple’s signature product and makes up about 50 per cent of its revenue. The company’s heavy reliance on China for manufacturing has spooked investors concerned about its exposure to tariffs, leading to a 19 per cent decline in its shares, their worst three-day performance in nearly 25 years.

Before tariffs were announced, Apple was on pace to make about 25 million iPhones in India this year, said Bank of America analyst Wamsi Mohan. Normally, around 10 million of those would supply the local Indian market. If Apple were to redirect all India-made iPhones to the US, it could meet about 50 per cent of American demand for the device this year, he said. Apple has been working to increase its India iPhone production for years.

The tariff on Chinese goods could add about $US300 to the current $US550 hardware cost to Apple of an iPhone 16 Pro that currently retails for $US1100, ­according to TechInsights. Apple could limit the damage by importing phones from India where the tariff is about half as high.

While Mr Trump has called for a manufacturing renaissance in the US, analysts and suppliers said moving iPhone production to Apple’s home country was a nonstarter because the cost would be far beyond the cost of paying the tariff. “If consumers want a $US3500 iPhone we should make them in New Jersey or Texas or another state,” research firm Wedbush said in a recent note.

Apple makes many iPhone components in China but in recent years has assembled more of the devices in India.

That allows the company to stamp India as the country of ­origin for those devices.