What is America's 'National Security clause' that may mean no increase in price of 'Made-in-India' iPhone 17 models in US

Time of India

2 days ago

The Trump administration imposed a 50% tariff on goods imported from India to the US last week. While the move could make many products costlier in the US, Apple iPhones remain unaffected by the tariffs for now. The exemption comes under the
national security clause
in Section 232 of the US Trade Expansion Act of 1962, which gives the president authority to impose tariffs on imports that threaten national security. However, electronics such as smartphones and laptops—like iPhones—are currently exempt from these new tariffs, shielding India-manufactured iPhones from extra costs in US markets.
This means iPhones assembled in India will not face the additional duty in the US market, shielding them from potential price hikes. Apple currently manufactures a large share of its iPhones for the US market in India. According to market researcher Canalys, production increased by 53% to 23.9 million units in the first six months of 2025, while exports increased by 52% to 22.88 million units, valued at $22.56 billion.
What is Section 232 of US Trade Expansion Act, 1962
As mentioned above, Section 232 of the Trade Expansion Act of 1962 allows the US President to impose restrictions on goods imports or enter into negotiations with trading partners if the US Secretary of Commerce determines, following an investigation, that the quantity or other circumstance of those imports "threaten to impair" US national security.
Though Section 232 does not define "national security," it describes steps the Secretary of Commerce, in consultation with the Secretary of Defense, shall take "to determine effects on national security of imports of articles." In considering the impacts, the Secretary of Commerce and the President are to consider:
Defense:
(1) domestic production required for projected U.S. defense needs
(2) capacity of domestic industry to meet such needs
(3) existing and anticipated availability of the human resources, products, raw materials, production equipment and facilities, and other supplies and services essential to U.S. national defense
(4) growth requirements of domestic industry and related supplies and services to meet U.S. defense needs and necessary conditions to assure such growth
(5) the impacts of goods imports on U.S. industry and capacity to meet U.S. defense needs.
Economy:
(1) "the impact of foreign competition on the economic welfare" of domestic industry
(2) the "displacement" of U.S. products by "excessive imports" causing effects including "substantial unemployment," decreases in government revenues, and/or loss of investment and skills.
Why the clause matters for Apple
Under the national security provision, the US government has placed steep duties—100% in some cases—on certain products such as semiconductors and chips. However, finished consumer electronics remain exempted. Trump has also stated that companies building products in the US will not be charged tariffs on the final product.
For now, Apple can continue selling India-assembled iPhones in the US without passing on extra costs to consumers. However, industry analysts note that while the exemption is in place, any future policy change could still affect Apple's pricing and supply chain strategy.
Majority of iPhones sold in US are Made in India
Speaking at Q2 earnings, Apple CEO Tim Cook said that the 'vast majority' of iPhones sold in the US are made in India. This production strategy helps the company avoid possible supply disruptions and insulates it from the immediate impact of the tariffs.
'In terms of the country of origin, it's the same as I referenced last quarter. There hasn't been a change to that, which is the vast majority of the iPhone sold in the US or the majority, I should say, have a country of origin of India,' Tim Cook told analysts.
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