Apple is employing several strategies to balance out the impact of steep U.S. tariffs on Chinese imports, which range from 54% to a potential 104%. These strategies aim to mitigate costs and maintain competitive pricing in the U.S. market:
Key Strategies of Apple to balance out Tariff on China
Increasing Production in India:
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Apple is ramping up iPhone manufacturing in India to diversify its supply chain and reduce reliance on China. India faces a significantly lower tariff of 26% compared to China’s 54% or more, making Indian-made iPhones more cost-effective for the U.S. market1.
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By 2025, Apple aims for India to contribute up to 25% of global iPhone production, with plans to meet about 50% of U.S. demand through Indian-made devices13.
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Stockpiling Inventory:
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Apple preemptively stocked up on inventory ahead of tariff deadlines, delaying the immediate financial impact of the tariffs into the next quarter
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Lobbying for Tariff Exemptions:
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Apple is actively seeking exemptions from U.S. tariffs, as it successfully did during previous tariff rounds under the Trump administration
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Cost Absorption and Supplier Adjustments:
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Apple is likely squeezing suppliers and absorbing some costs by reducing profit margins to avoid steep price hikes for consumers. The company has maintained a consistent starting price of $999 for its flagship iPhones since 20171.
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Diversifying Supply Chain:
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Apple has started exporting components manufactured in India to Vietnam and China, further diversifying its supply chain and reducing dependency on single regions4.
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Avoiding U.S.-Based Manufacturing:
Outlook
Apple’s strategic shift toward Indian production and lobbying efforts are critical in mitigating tariff impacts while maintaining pricing stability in the U.S. However, geopolitical tensions and rising production costs in alternative locations remain challenges that Apple must navigate carefully
