Apple Moves iPhone Production Away from China to Avoid US Tariffs

Key Highlights:

• Apple to stop shipping China-made iPhones to the US
• iPhones for US market to be made in India, iPads in Vietnam
• CEO Tim Cook warns tariffs could cost Apple £677 million this quarter
• Apple sales in China decline as US-China tensions escalate
• Panic buying may have boosted Q1 results ahead of tariff hikes

Apple Shifts Supply Chain to Dodge US Tariffs

Apple has confirmed that iPhones sold in the United States will no longer be manufactured in China, marking a significant shift in the tech giant’s global supply strategy.

In response to escalating tariffs imposed by US President Donald Trump, Apple will now source most iPhones destined for the US from India, while iPads will be produced in Vietnam. The move aims to minimise price increases for American consumers and reduce the company's reliance on China.

Trade War Impact Still Emerging

Although Apple said the immediate impact of the tariffs has been limited so far, CEO Tim Cook warned the company expects to incur £677 million in additional costs this quarter, assuming the current policies remain unchanged.

The announcement follows Apple’s latest financial results for January to March, which showed:

• Revenue: £71.8 billion
• Earnings: £18.6 billion (above analyst expectations)

Cook noted that part of this strong performance may have been driven by US customers purchasing devices in advance of tariff hikes, but cautioned that the full impact will become clearer when Apple reports figures for the April to June quarter.

Stock Hit and Chinese Sales Drop

Apple's dependency on Chinese manufacturing made it particularly vulnerable to Trump's aggressive trade policies. When the president introduced his plan for reciprocal tariffs—now temporarily paused for 90 days—Apple’s stock price dropped by 23%, wiping out a staggering £582 billion in value.

Although shares have since recovered slightly, they are still trading 5% below pre-tariff levels, a reflection of ongoing uncertainty.

Meanwhile, Apple’s sales in China dipped by 2.3% during Q1, highlighting the knock-on effects of the growing economic rift between Washington and Beijing.

Complex Supply Chain Rebalancing

Addressing the decision to move manufacturing, Tim Cook said:

“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.”

While Apple is relocating production for US-bound devices, the company confirmed that devices sold outside the US will continue to be manufactured in China.

Conclusion

Apple’s move to diversify its supply chain marks a significant response to rising geopolitical tensions and shifting trade policies. By moving iPhone production to India and iPad assembly to Vietnam, the company aims to cushion its US consumers from tariff-related price hikes while reducing overdependence on Chinese manufacturing.

As the global tech landscape adjusts to the new realities of international trade, Apple’s strategy may serve as a blueprint for other companies looking to safeguard operations in an increasingly uncertain world.

Source: (SKY.com, Investing.com)