Apple Looks to India for iPhone Production as U.S. Tariffs on China Soar

Apple is making strategic moves to reduce the impact of new tariffs by sourcing more iPhones from India, according to a new report from the Wall Street Journal. With the U.S. government imposing hefty levies on Chinese imports—starting at 54%—Apple is looking for ways to soften the financial blow without fully overhauling its China-centered supply chain.

This shift comes as the company braces for uncertainty under former President Donald Trump’s recently announced trade policies. China’s retaliatory duties and the threat of further escalation have only heightened Apple’s urgency to find alternative production paths.

Why India?

India already plays a growing role in Apple’s global supply chain. The company began assembling older iPhone models there in 2017 and has since progressed to newer devices. That production gives India official "country of origin" status for these iPhones, helping Apple reduce import duties in both India and the U.S.

Before the tariffs were announced, Apple was on track to make about 25 million iPhones in India this year. Typically, around 10 million would stay in the local market. Now, Apple could redirect much of that supply to the U.S., covering about half of American demand with lower 26% tariffs, compared to the steep new charges on China-made goods.

Tariff Pressure

The stakes are high. Analysts estimate the new tariffs could add roughly $300 to the production cost of an iPhone 16 Pro—already retailing for around $1,100. While Apple has not yet raised prices in response, a prolonged trade standoff could eventually lead to higher retail costs or tighter profit margins.

Still, building iPhones entirely in the U.S. isn’t a viable option. Analysts suggest it would drive costs sky-high. Wedbush estimates a domestically made iPhone could end up costing around $3,500 due to higher labor, component, and logistics expenses.

Apple’s Broader Manufacturing Strategy

Even with this pivot to India, Apple remains deeply rooted in China’s vast and efficient manufacturing network. Suppliers like Foxconn have built massive operations in the region, offering scale, speed, and skilled labor that’s hard to replicate elsewhere.

At the same time, Apple is investing more in U.S. manufacturing in select areas. The company has pledged over $500 billion toward American production over the next four years, which includes building AI servers and purchasing advanced chips from TSMC’s new plant in Arizona.

Vietnam and Other Hubs

Vietnam, another growing production base for Apple, hasn’t escaped the trade crosshairs. The country now faces a 46% tariff—close to China’s rate. However, there may be some wiggle room, as Trump hinted at a possible reprieve following talks with Vietnam’s leadership last week.

Looking Ahead

For now, Apple is walking a careful line. The company is seeking a tariff exemption—something CEO Tim Cook successfully negotiated during Trump’s first term. But until the trade environment settles, redirecting iPhone production from China to India provides a flexible way to keep costs manageable without disrupting its global operations.

As tensions continue to unfold, Apple’s approach highlights the complexities of navigating international trade—especially when your flagship product drives nearly half your revenue.