At least for now, Apple has managed to avoid the biggest crisis since the pandemic.
Donald Trump’s 125% tariff on goods produced in China threatened to disrupt its supply chains as severely as Covid Snarls five years ago. On Friday night, the U.S. president handed Apple a major victory, eliminating many popular consumer electronics products. These include iPhone, iPad, Mac, Apple Watch and Airtags.
Another victory: The 10% tariff on goods imported from other countries has been removed.
While new, lower so-called sectoral tariffs may still be using commodities with semiconductors (and China’s 20% tariff), the change marks a victory for Apple and the consumer electronics industry still rely heavily on Asian countries to make manufacturing.
“This is Apple’s main relief,” Evercore ISI analyst Amit Daryanani said in a note on Saturday. “Tariffs will drive inflation of material costs.”
He expects the stock to be held on Monday after a lasting 11% rout this month.
Prior to the latest exemption, iPhone Maker has a plan: adjusting its supply chain to make more of India’s U.S. restricted iPhones, which will be subject to lower taxes. Apple executives believe this will be a near-term solution to avoid intoxicating Chinese tariffs and avoid price increases.
Given that India’s iPhone facilities produce more than 30 million iPhones a year, manufacturing from the country alone can meet a lot of demand from the United States. Today, Apple sells about 220 million to 230 million iPhones each year, about one-third of it goes to the United States.
Without barriers, this shift will be difficult to achieve, especially since the company is already close to the production of the iPhone 17, which will be mainly produced in China. In Apple’s business, finance and marketing divisions, people’s impact on the fall launch of new phones has been increasing and has caused fear.
The company will have to complete the daunting task of moving more iPhone 17 production to India or elsewhere in just a few months. It may have to raise prices (still possibly something) and fight suppliers to increase profit margins. Apple’s famous marketing engine will have to convince consumers, and it’s worth it.
But the feeling of uncertainty remains. White House policy may change again, and Apple may need to make bigger changes. But, at least for the moment, management is breathing comfortably.
Another question: How will the country retaliate if Apple moves more production from China at a rapid pace? Apple generates about 17% of revenue from the country and operates dozens of stores, making it even more outlier among U.S. companies. An Apple spokesperson declined to comment.
China has launched a competition survey on U.S. companies, which can create problems for Apple through its own customary processes. In recent years, it has also banned iPhones and other U.S.-designed devices from its government staff. After the United States crackdown on Chinese technology champion Huawei Technologies Co., Ltd.
According to Morgan Stanley’s estimates, the iPhone is Apple’s biggest money-maker, with about 87% of which are made in China. The country also makes four-fifths of iPads, as well as 60% of Macs.
These products together result in about 75% of Apple’s annual revenue. Still, the company now builds nearly all Apple Watches and Airpods in Vietnam. The country also manufactures some iPads and Macs, and MAC production is expanding in Malaysia and Thailand.
Morgan Stanley estimates that the company generates about 38% of iPad sales in the U.S., as well as about half of Mac, Apple Watch and Airpods revenue.
Completely separate from China (the Apple manufacturing hub for decades). Although Trump has pushed Apple to make iPhones in the United States, the lack of domestic engineering and manufacturing talent will make this nearly impossible in the near term.
The scale and scale of China’s facilities make it unparalleled in speed and efficiency. Production in China is also crucial to Apple’s sales in the world outside the United States. The California-based Cupertino company earns nearly 60% of revenue outside the Americas.
Lobbyists at Apple and other technology companies have been pushing for the White House to make exemptions as a series of tariffs were announced on April 2.
But the discussion in recent days has brought the additional urgency to the 145% tariff on imports from China after a series of Tit-tat retaliation between Washington and Beijing.
The potential impact is even worse after Trump halted higher tariffs on other countries. This means that Apple’s rival Samsung Electronics will make phones outside of China, which will have an advantage.
Apple and others have been stressing to the Trump administration that despite their willingness to increase investment in the United States, it is almost no benefit to transfer the eventual rally to the country. Instead, they believe that the United States should focus on bringing back high-value work and encourage investments in such a way as semiconductor production.
This article was generated from the Automation News Agency feed without the text being modified.
