Trump’s 25% tariff threatens Apple’s India export pivot

Apple’s ambitions to turn India into a major iPhone export hub for the US could be facing a serious challenge, with US President Donald Trump announcing a 25% tariff on Indian exports along with an additional penalty tied to New Delhi’s defence and energy ties with Russia.

While the measures could potentially disrupt Apple’s rapidly expanding manufacturing and export plans from India, it remains unclear if high-value electronics such as iPhones will be directly impacted, leaving the tech giant and its suppliers in a wait-and-watch mode.

Some of India’s top exports to the US – including around $14 billion worth of electronics products in FY25, $10.5 billion in pharmaceuticals and $4.09 billion in petroleum – are, for now, exempt from the tariffs. However, analysts say the scope of the penalties could still widen, and details about implementation remain unknown.

“The new 25% tariff on Indian exports to the US will certainly hit Apple’s plans of making India a major iPhone export base for the American market,” said Navkendar Singh, associate vice president, Devices Research, IDC India, South Asia & ANZ.

The US makes up around 25% of iPhone shipments for Apple, which is around 60 million per annum, as per IDC. “The plans to meet all iPhones to US coming from India need significant iPhone production expansion in India, which will suffer a blow now,” Singh said.

However, analysts say this very success may have triggered the tariff response from Trump.

Notably, U.S. President Donald Trump recently criticised Apple’s India strategy. U.S. President Donald Trump said on May 15 in Doha, Qatar, that he spoke to Apple Inc. CEO Tim Cook told him there’s no need to build factories in India unless it’s to serve that market specifically.

“That rise in exports has triggered concern from Trump, who sees Apple’s increasing dependence on India,” said Neil Shah, Vice-President at Counterpoint Research. “This move appears to be a tactic to pressure Apple to manufacture more within the US. By taxing imports from India, Trump is sending a message that even Apple’s India-made products won’t be spared, effectively pushing domestic manufacturing.”

Shah added that the move also gives Trump a geopolitical lever to “square off with India and gain leverage over the trade deficit.”

Since April, when talk of new tariffs first emerged, India was relatively better placed than other markets. Many global manufacturers, including Apple, saw India as a natural diversification bet. But now, with tariffs on the horizon for both India and China, Apple is faced with a tough choice.

“These are the only two viable production bases. Brazil is the third option, but its current Foxconn capacity is too limited and will take time to scale up,” Shah said.

In the near term, Apple may adopt a wait-and-watch approach, continuing shipments while monitoring policy developments. “They can either absorb the costs or pass them on to consumers, or hope the policy changes again, as has happened with Trump in the past,” Shah added.

He noted that Apple may not raise prices immediately, especially with the next iPhone launch just weeks away. But a price correction is likely.

“Apple is already dealing with rising component costs, especially with TSMC’s new 3nm chip getting more expensive. So they will either need to squeeze costs elsewhere or raise prices, like Samsung did with its foldables,” Shah said.

Between component cost increases and now tariffs, Apple may use the fall iPhone launch as an opportunity to adjust prices and offset these additional pressures. “Apple is stuck in a pincer movement, under pressure from both sides, and must decide which option involves the least friction,” Shah said.

Ashok Chandak, president of IESA & SEMI India, said

“The imposition of 25% tariff by the U.S. on Indian goods will be a short-term challenge that could disrupt supply chains and dent price competitiveness. India does not have any major advantage compared to other Asian countries anymore if 25% tariff above baseline 10% is continued. However, it also underlines the urgency for India’s electronics sector to diversify export markets, deepen domestic markets, develop Indian brands and products, and move up the value chain to reduce dependency on price-sensitive, tariff-exposed exports.”

“As India does not make much semiconductors, it won’t be affected in short term. We hope that the ongoing final trade negotiations will create some positive outcome in next few weeks or months as both countries will want to find a good balance,” Chandak added.

Apple exported over $5 billion worth of iPhones from India in the April–June quarter (Q1 FY26), accounting for approximately 70% of the country’s total smartphone exports, according to preliminary data exclusively reviewed by Moneycontrol. This marks a sharp increase from around $3 billion during the same period last year.

Driven by Apple’s production ramp-up through Foxconn and Tata Electronics, India’s overall smartphone exports surpassed $7 billion in the June quarter, up more than 40% year-on-year from approximately $5 billion in Q1 FY25. These figures reaffirm India’s growing role in global smartphone supply chains, particularly for high-value devices.