Donald Trump's Reciprocal Tariffs could shift Apple's supply chain focus to India

US President Donald Trump's newly announced tariffs on multiple countries that could reshape Apple's global supply chain strategy, potentially boosting India's position as the company's manufacturing hub while complicating efforts in other countries. The White House on unveiled "reciprocal tariffs" targeting more than 180 countries, with China facing a staggering 54% total tariff rate, Vietnam 46%, and India a comparatively lower 26%. These tariffs threaten to disrupt Apple's years-long effort to diversify production away from China.
India stands to benefit from this disruption as its relatively lower tariff rate could make it more attractive as Apple's manufacturing destination. The company has already been ramping up iPhone production in India, with government officials indicating Apple aims to manufacture about 25% of all iPhones globally in the country.
For Apple, the manufacturing pivot to India is crucial, with approximately 10-15% of iPhones, the entirety of iPhone 16 lineup, are currently assembled in India. Analysts at Bernstein project this could reach 15-20% by the end of 2025. While the majority of that production is being sold in the country, some of it is also being exported to other markets.
India's mobile phone exports have already grown nearly 50% in the first ten months of this fiscal year, with industry projections estimating total exports of Rs 1.8tn ($21 billion) for the year. Apple's manufacturing expansion has contributed significantly to this growth, with iPhone exports reaching a record $12.8 billion in 2024, a 42% year-over-year increase.
Apple is also starting AirPods production in India this month, and the units exported in the country will be exported to the US, UK, and other markets.
Meanwhile, other manufacturing hubs face greater challenges. Vietnam, where Apple produces approximately 90% of its wearables and 20% of iPads, will struggle with a 46% tariff. China, still accounting for around 90% of iPhone assembly and 80% of iPad production, faces the steepest tariffs.
Apple's smaller manufacturing operations in Malaysia (25% tariff) and Thailand (36% tariff) will also be affected. Despite announcing a $500 billion investment in the US including a new AI server factory in Texas, Apple has minimal mass production capability in the United States.
The tariffs present a significant challenge for Apple, potentially adding $8.5 billion in annual costs according to Morgan Stanley estimates. This could reduce the company's 2026 profits by approximately $7.85 billion, or about 7%.
For Apple, the tariffs present difficult choices: absorb the costs and reduce profits, raise prices for consumers, or accelerate its shift to lower-tariff regions like India while developing more robust local supply chains.