President Trump announced “Liberation Day” tariffs affecting nearly all countries, significantly impacting Apple, which imports iPhones assembled in India and China. India faces a 26% tariff, while China’s rate is up to 54% when accounting for previous tariffs. Consequently, new iPhones will be approximately 40% more expensive in the U.S., with products from Vietnam incurring a 46% tariff. The intent behind these tariffs is to support U.S. manufacturing; however, Apple’s reliance on international suppliers makes a quick shift unfeasible. This led to an 8% drop in Apple’s stock and affected suppliers. Higher prices for consumers are expected as a result.
President Donald Trump of the United States has proclaimed “Liberation Day” tariffs affecting essentially every nation globally. This move will be significantly costly for Apple, as the American smartphone maker relies on importing its iPhones, which are currently manufactured in India or China.
India is facing a “discounted” tariff of 26%, whereas China will see an even steeper rate of 34% on top of the 20% imposed earlier this year. Consequently, newly imported iPhones in the United States will be, on average, approximately 40% more expensive. Products shipped from Vietnam will face a 46% tariff, which includes items like iPads and AirPods.
The political justification for these tariffs is the U.S. intent to engage in a trade war with various nations; however, in practice, the financial burden will fall on either American businesses or everyday consumers, which is the typical outcome of such tariffs.
Even setting aside the aggressive stance of the Trump Administration, the primary objective of tariffs is to render foreign products less attractive and to promote domestic manufacturing.
In Apple’s scenario, however, such a transition is unlikely to occur in the near term. Cupertino has its chip production housed in Taiwan, sources its displays from Samsung in South Korea, and obtains components from Sony in Japan.
The United States lacks alternatives for any of these products, and shifting production back to the U.S. would take years, with no assurance that there would be an adequate workforce ready to satisfy demand.
This intricate predicament has led to an almost 8% decline in Apple’s stock value. Of its 200 suppliers, 158 maintain production facilities in China, with major partners like Goertek, Luxshare, and Lens Technology seeing a 10% drop in their stock prices.
Earlier in the year, Tim Cook had a discussion with Donald Trump, pledging a $500 billion investment by Apple in the U.S. Nonetheless, the White House has stated that there will be no exemptions this Liberation Day, signaling that U.S. citizens should prepare for increased prices on goods and services—after all, that’s what they voted for.
Via