Apple has highlighted that tariffs are significantly increasing their costs by hundreds of millions of dollars. On May 1, the company confirmed that it would be greatly affected by the trade war resulting from Donald Trump’s tariffs. Apple reported that these tariffs could lead to a $900,000,000 increase in costs for the second quarter of the year, which concludes in June.
CEO Tim Cook has stated that the company has strategies in place to mitigate the impact of tariffs in the future. Despite the substantial rise in costs, Cook explained during a conference call that Apple experienced a ‘limited impact’ from tariffs in the second quarter, thanks to adjustments in supply chains and inventory.
For the quarter ending in June, Cook remarked, “Assuming the current global tariff rates, policies and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our cost.” He further mentioned that most iPhones sold in the US will be sourced from India, while the majority of iPads, Macs, and Apple Watches will come from Vietnam. This shift is due to the company’s investment in manufacturing outside of China.
Cook noted, “We have a complex supply chain. There’s always risk in the supply chain. What we learned some time ago was that having everything in one location had too much risk with it.” However, there are concerns from experts that these shifts could lead to increased costs being transferred to consumers.
Jacob Bourne, an analyst at Emarketer, commented, “The company’s proposed manufacturing shift to India raises pressing questions about execution timeline, capacity limitations, and potentially unavoidable cost increases that will shrink margins, be passed to consumers, or have a mix of consequences.”
After Trump’s initial tariff announcement on April 2, Wedbush Securities analyst Dan Ives warned of a potential drastic increase in the cost of the next iPhone. He suggested it could be priced up to $3,500, significantly higher than the current most expensive Apple smartphone, the iPhone 16 Pro Max, which retails for $1,199.
Ives remarked, “For US consumers, the reality of a $1,000 iPhone being one of the best-made consumer products on the planet would disappear. It speaks to our point that if consumers want a $3,500 iPhone, we should make them in New Jersey or Texas or another state… the concept of making iPhones in the US is a non-starter in our view at $1,000.”