Apple has announced a significant shift in its manufacturing strategy. The tech giant will no longer source devices sold in the United States from China. This decision comes as Apple aims to reduce the impact of tariffs imposed during the trade tensions under former President Donald Trump.
Instead of China, most iPhones will now be produced in India, while iPads will be made in Vietnam. This move is intended to prevent steep price increases for American consumers, which could result from the tariffs.
In its recent financial report for the first quarter of the year, Apple stated that the trade war has had a limited effect on its overall performance so far. However, CEO Tim Cook warned that the tariffs could add approximately £677 million in costs in the current quarter alone, depending on whether Trump’s policies remain unchanged.
During this period, Apple reported revenues of £71.8 billion and earnings of £18.6 billion, both figures exceeding analysts’ expectations. The company experienced strong demand for iPhones, likely driven by consumers rushing to buy before the new tariffs took effect. However, the full extent of this panic buying will be clearer when Apple releases its results for the second quarter.
Despite these strong numbers, Apple’s reliance on Chinese manufacturing has left it vulnerable to the trade war’s impacts. The company’s stock took a hit, dropping 23% after Trump announced plans for reciprocal tariffs on multiple countries, erasing £582 billion in market value. Although the stock has recovered somewhat, it remains 5% below its value before the tariffs were discussed.
Additionally, Apple’s sales in China fell by 2.3% in the first quarter, reflecting the growing tensions between the U.S. and China. Cook acknowledged the risks associated with having a supply chain concentrated in one location and emphasized the need for diversification.
While devices sold in the U.S. will now come from India and Vietnam, Apple will continue to manufacture products for other markets in China. This strategic pivot marks a new chapter for Apple as it adapts to the changing landscape of international trade and manufacturing.