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Apple to pay 25% tariff on imported iPhones: US President Donald Trump
In a fresh salvo against Apple Inc, US President Donald Trump on Friday told the Cupertino-headquartered company it could face a tariff of 25 per cent if it manufactured iPhones in 'India or any place else' for sale in the United States (US).
Trump's message on Truth Social indicated that he's already conveyed it to Apple CEO Tim Cook that all iPhones to be sold in the US must be manufactured there. The development coincides with India's talks with the US for a bilateral trade agreement during the 90-day pause in the 'reciprocal tax' announced by Trump earlier.
The new warning comes soon after Trump's recent visit to West Asia where he publicly recounted his conversation with Cook that he should not 'build in India'' and that India can take care of itself.
Top government officials in India, while declining comment, indicated that it's up to Apple to take a decision. A source said: ''It's a business decision that they have to take. It's their call on whether they would like to absorb the price hike due to increased tariffs.''
The company, it's learnt, has maintained that it would continue to invest in India and that its stance remains the same. Currently, Apple products are not manufactured in the US — the largest market for iPhones pegged at around $40 billion annually.
At the moment, the contract manufacturers of Apple are going full steam to expand capacity in India, with two new iPhone assembly plants by Tata Electronics and Foxconn expected to roll out production soon. The Apple suppliers are also in the process of expanding the supply chain and capacity. The expansion was planned three years ago as part of Apple's strategy to shift more capacity from China to India. As part of the plan, Apple Inc has been looking to push its production capacity in India to $25-26 billion by FY26, from around $22 billion, which it hit in FY25.
To achieve its US export plan however, it would require doubling the number to $40 billion-$45 billion (including the growth in the domestic sales in India) in the next 24 months, sources explained.
On the latest development, experts explained that the 25 per cent tariff is not specific for India but is applicable to all smartphones including iPhones being imported to the US. A source listed out three scenarios for Apple—first, it can pass on the cost of the higher tariffs to US consumers with iPhone prices going up; second, it could ask the US government for a subsidy to bridge part of the cost differentiation like it has done for electric vehicles; third, there's a sense that the 25 per cent tariff is designed to provide protection to iPhone vendors who set up plants in the US against cheaper imports from India.
Tarun Pathak, research director at Counterpoint Research said: ''We still think these are very initial days and might evolve into something very different.'' But he said that China and India will continue to play a key role in manufacturing operations for Apple. While stating that every government would like to bring manufacturing locally to their country in theory, he said there are a lot of moving parts in the practical world.
''Supply chains are all Asia heavy and won't move unless the US is giving massive subsidies to dilute disabilities, but even then it will take two to three years,''Pathak said.
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