Apple posted stronger-than-expected profits in its latest quarter, but there's a big challenge looming: US tariffs. CEO Tim Cook revealed that Apple expects to take a $900 million hit this quarter due to these trade barriers — even though their impact was “limited” earlier this year.
On an earnings call, Cook said, “We believe the majority of iPhones sold in the US will soon be made in India.” For now, Apple’s products have escaped the harshest of US tariffs, but uncertainty remains. Cook added that if no new tariffs are introduced and current rates stay the same, the additional cost from tariffs this quarter could still reach $900 million.
The US and China have been locked in a tit-for-tat trade war, with each side imposing high tariffs on the other’s goods. While some high-tech items like smartphones and chips were temporarily spared, the situation is still volatile.
To prepare for possible new tariffs, Apple stockpiled inventory ahead of time. But as Canalys analyst Le Xuan Chiew pointed out, Apple is clearly accelerating its move to shift more of its US-bound production to India — a strategic move to reduce future risks.
Right now, most iPhones sold in the US are still made in China, but that’s changing. Apple has ramped up manufacturing in India recently. Meanwhile, other Apple products — including iPads, Macs, Apple Watches, and AirPods — will mostly come from Vietnam for US customers, according to Cook. However, China will continue to be Apple’s manufacturing hub for devices sold outside the US.
Despite these supply chain challenges, Apple pulled in $95.4 billion in revenue last quarter, with $17 billion coming from the China market alone. The company reported a profit of $24.8 billion.
Still, investors weren’t thrilled. Apple shares fell over 3% in after-hours trading.
Analyst Jacob Bourne from Emarketer said the real focus should be on how Tim Cook manages this complex global trade puzzle. Apple’s manufacturing shift to India raises tough questions about how quickly it can scale, how much it’ll cost, and whether those costs will hit Apple’s profits or customers’ wallets — or both.