Apple Eyes India As China Tariffs Bite

Apple looks to India as a possible lifeboat against tariffs and over-reliance 

Apple’s business model is under mounting pressure from US President Donald Trump’s barrage of China tariffs, prompting the iPhone maker to ramp up shipments from India to the United States. Executives say this is only a short-term solution for covering some of its American orders. While India may help Apple offset immediate cost hikes, analysts warn it cannot yet replace China’s vast supply chain. Apple’s search for alternatives—amid calls to move production to the US—presents one of its biggest challenges since it began outsourcing large-scale manufacturing to Asia.

Apple speeds India shipments to stem tariff fallout

Apple has increased the pace of iPhone deliveries from India to the US since President Donald Trump launched his latest trade crusade. At least 10 flights departed Chennai International Airport in recent days, according to three Indian officials, reflecting a scramble to cushion the blow of a 104 per cent US levy on China-made devices that kicked in on Wednesday.

Two Indian officials told the Financial Times that Apple sees India as more than just a stopgap, hinting at deeper investment. “Apple is looking at ramping up here,” said one official. Apple declined to comment. Yet it remains clear that this pivot is an urgent response to a growing crisis: the iPhone maker has lost around $700bn in market value since Trump’s “liberation day” announcements, underlining how vulnerable it is after years of building its products in China.

Although Apple’s Indian facilities can supply up to 30mn iPhones for the US market each year—roughly three-fifths of the annual American demand—they are not suited to deliver a rapid, massive shift away from Chinese plants. Bank of America analyst Wamsi Mohan suspects these Indian flights are part of Apple’s short-term fix, warning that it is “not a viable long-term solution” if tariffs drag on.

China still dominant in Apple’s supply chain

Apple has been growing its India business quietly, especially after the pandemic shook its China-based manufacturing lines. Yet about 80 per cent of Apple’s smartphones still come from China, says Counterpoint Research. Even as the group hedges its bets abroad, the country remains central to its fortunes.

On Wednesday, MK Stalin, the chief minister of Tamil Nadu—the southern Indian state hosting four of Apple’s five Indian iPhone sites—met Andy Priestley from Jabil. The US-based supplier last year signed a memorandum of understanding to expand in Tamil Nadu. While Jabil has not publicly linked its India operations to Apple, Stalin said on social media the meeting concerned further “business investments” in the state.

India itself is also on Trump’s trade radar, facing a 27 per cent “reciprocal” tariff. But New Delhi hopes that talks on a bilateral deal might ease the burden, especially given the White House’s partial pause on more duties for countries willing to strike agreements. India is thought to be among those set to benefit from the 10 per cent baseline levy, rather than the higher rates some others still face.

Apple shares rebounded sharply after Trump’s statement on Truth Social suggested further relief could be available for select companies. “We’ll take a look at it,” the US president told reporters, referring to potential exemptions for big exporters like Apple. Still, industry experts say the group’s dependence on China means it could be exposed to punishing import taxes if trade relations remain frosty.

Tariffs may force global price hikes

Shifting extra manufacturing to India cannot solve Apple’s largest headache: the bulk of its production still relies on a Chinese ecosystem built up over two decades, with elaborate networks of suppliers. That leaves Apple vulnerable to steep new duties, meaning it may either pass costs on to consumers or swallow them, harming profits. Multiple analysts reckon Apple could raise prices across all markets later in the year—likely around the new iPhone launch in September—and might also try to push suppliers to absorb some of the extra costs.

The challenge intensifies as Trump demands an American-made iPhone. Commerce secretary Howard Lutnick and White House press secretary Karoline Leavitt have been vocal on this, declaring that the US has the labour and resources to handle iPhone production on its own soil. Analysts disagree, saying Apple has invested billions in China-based firms like Foxconn and Pegatron for final assembly, plus hundreds of other component makers scattered across Asia.

Wedbush analyst Dan Ives estimates Apple would need at least three years and $30bn to move just 10 per cent of its supply chain stateside. Morgan Stanley’s estimates suggest costs could run to “several billions” even for a partial shift. Erik Woodring, also at Morgan Stanley, points out that Apple is not just swapping factories—it is being asked to re-engineer a system that has evolved around Asia’s lower costs and specialised skills. “They’ve spent decades building a China-centric model,” he said, “and moving that is a monumental task.”

Apple’s US expansion: not enough to offset the storm

Apple has tried to underscore its commitment to the US. Earlier in the year, it pledged to add 20,000 employees nationwide as part of a $500bn spending plan, including a new server-manufacturing site in Texas. But it does not own its iPhone factories; it relies on long-standing contracts with key suppliers, some of which are only starting to expand into places like India and Vietnam. The vast majority of Apple’s top 187 suppliers—covering nearly all of its direct procurement—still operate in mainland China and Taiwan, according to its 2023 fiscal-year data.

Vietnam, a critical source of Apple’s MacBook production, was slammed with a 46 per cent tariff, overshadowing an offer from Hanoi to cut duties on US goods to zero. Even if Apple moved final assembly to the US, it would still be reliant on Chinese or other Asian parts that could themselves be taxed. “That’s the crux of the problem,” warns Bank of America’s Mohan. “Without components shifting too, an American iPhone plant faces the same tariff burden.”

Luxshare, another Apple supplier, told Bernstein analysts it finds the notion of large-scale US iPhone assembly impractical, because so many key inputs remain rooted in Asia. Bernstein’s team said it underlined their view that a US-based iPhone supply chain “is a non-starter.”

Outlook: Realign or risk ongoing disruption

This crisis arrives at a precarious time for Apple. The group has already lost around $700bn in stock market value in just over a week, highlighting how swiftly confidence can plummet when its streamlined China-based model collides with a global trade war. While India can help mitigate some near-term hits, it offers neither the scale nor the infrastructure to solve Apple’s tariff woes outright.

Analysts say the best Apple can do in the short term is juggle production lines, trying to reduce Chinese output for the US market and possibly adjusting prices later in the year. Longer term, Apple may be forced to rethink its entire approach if Trump continues pushing for electronics to be “made in America” or if Sino-US tensions do not ease.

Whether Apple can weather this storm depends on how swiftly it can diversify beyond China while keeping margins stable and satisfying consumers who have come to expect premium devices at similar prices each autumn. For now, Apple’s efforts in India serve as a reminder that while the company wants to spread its production risk, leaving China behind remains a daunting, and perhaps unworkable, challenge.