Although Apple is an American company with its highest sales coming from the U.S. market, especially regarding iPhones, the tech giant produces most of its technology abroad.
Around 80% of Apple’s products are manufactured in China, making it heavily dependent on its Chinese partners.
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Due to China’s low production and manufacturing costs, Apple has produced many of its iPhones in the country for decades. However, with the looming tariffs and uncertain economy, action must be taken quickly to protect the business from harm.
The recently imposed high tariffs on Chinese-made products imported into the U.S. have forced Apple to develop a new plan to navigate these challenges and mitigate potential adverse effects the tariffs could have on the company.
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In April, President Trump declared a national emergency due to foreign trade and economic practices. He implemented new tariffs on products imported into the U.S. from many countries, including an additional 10% baseline tariff.
However, Trump changed course within days, stating he would pause the 10% additional global “reciprocal” tariff on many countries for 90 days, except for China, whose exemption expires on May 2.
In only a few days, China will face tariffs of 145% on imports, much higher than India’s 26% or any other country’s.
Although some phones, including smartphones, have been exempted from the “reciprocal” tariff, temporarily easing Apple’s nerves, it is unknown how long this exemption will last.
Apple makes strategic moves in iPhone production.
Image source: Bloomberg/Getty Images
Apple is an American company with almost no production in its home country
Although China makes a significant amount of Apple (AAPL) products, the tech giant also has a small percentage of production in India.
India is attractive for many companies due to its government’s support for the tech industry and its labor costs, which are approximately 70% lower than in China.
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However, India’s tariffs on imported mobile phone parts are very high compared to those in other countries. Its production capabilities are also much slower due to a lack of advanced technology.
Many American companies still choose to produce their products in China, due to its relatively high levels of advanced technology and productivity.
Apple is moving iPhone production to an unexpected location
Despite India’s production limitations, a source close to the company recently revealed that Apple is in talks to shift most, if not all, of its iPhone production for the U.S. market to India by the end of 2026.
Apple has allegedly been in confidential contact with its leading electronics manufacturers in India, Foxconn and Tata, to accomplish this plan. However, neither company has officially confirmed the rumors to the public.
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Nonetheless, this revelation doesn’t seem so far off, since Apple has quietly been increasing production in India over the past few months to have sufficient inventory in preparation for the Trump tariffs.
Apple shipped nearly $2 billion worth of iPhones to the U.S. in March, with around $1.3 billion from Foxconn and $612 million from Tata, marking a record amount for both India-based suppliers.
The tech giant is expected to announce its earnings for the second quarter of fiscal 2025 on May 1, and many hope to receive confirmation regarding production changes, as well as gain insight into how it plans to navigate the tariffs.
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