Adapted by:
Javier Lacort
Senior WriterI write long-form content at Xataka about the intersection between technology, business and society. I also host the daily Spanish podcast Loop infinito (Infinite Loop), where we analyze Apple news and put it into perspective.
Alba Mora
WriterAn established tech journalist, I entered the world of consumer tech by chance in 2018. In my writing and translating career, I've also covered a diverse range of topics, including entertainment, travel, science, and the economy.
The ongoing trade war is compelling Apple to seek alternatives for its iPhones, particularly those intended for the U.S. India is emerging as a crucial option for the company in light of new tariffs that might force the brand to raise prices.
Current situation. Apple is experiencing its worst stock market decline of the century, with shares plummeting 20% just a few days after President Donald Trump announced new tariffs. These tariffs impose a 54% tax on Chinese products, compared to only 26% on Indian goods.
According to The Times of India, Apple is quickly redirecting its Indian-made iPhones to the U.S. market. With this defensive strategy, the tech giant aims to mitigate the tariffs’ immediate economic impact while also seeking long-term solutions.
Why this matters. This crisis could accelerate a shift in global tech manufacturing. In this context, India could potentially rise as a major electronics production hub at China’s expense.
The move to India isn’t solely about avoiding tariffs. It also serves to diversify geopolitical risks and capitalize on the growing Indian market.
America’s dream. Commerce Secretary Howard Lutnick recently said that Apple could soon manufacture the iPhone domestically. However, the idea of a U.S.-made iPhone is economically unfeasible.
According to 404 Media:
- An iPhone that costs $30 to assemble in China would cost $300 in the U.S.
- Achieving this would necessitate a complete restructuring of global supply chains that have been established over decades.
- Even if manufacturing were done domestically, Apple would still depend on imported components that are subject to tariffs.
Data. Current tariffs would raise the cost of producing an iPhone 16 Pro from $550 to $850–an increase of $300. If produced in India, the increase would “only” be $150.
If Trump follows through on his threat to raise tariffs on China to 104%, the production cost could soar by an additional $600 per unit, according to Newsweek.
The pragmatic solution. India is emerging as a viable alternative. It already has the capacity to manufacture around 25 million iPhones annually. This is enough to meet roughly 50% of U.S. demand if production is redirected there, according to Bank of America estimates.
Since 2017, Apple has gradually shifted some of its production to India. The Wall Street Journal reports that the company initially focused its manufacturing in the country on older models and eventually expanded to newer ones.
- The most practical option would be to secure a tariff exemption similar to the one granted in 2018, but Trump’s actions have destroyed any hopes.
Political perspective. India and China have a historically tense relationship characterized by territorial disputes and competition for regional influence. This is exemplified by the Indian-China military clash in the Galwan Valley in 2020.
Apple finds itself caught in the middle of this rivalry. Its business decisions could have diplomatic implications that may intensify competition between the two nations.
Looking ahead. Apple CEO Tim Cook will likely attempt to negotiate tariff exemptions while gradually increasing production capacity in India. However, you shouldn’t expect dramatic or immediate changes. It’s inherently a slow process.
China will continue to play a crucial role for Apple. In the end, the Asian nation accounts for 80% of its overall production capacity and 90% of its iPhone production. In contrast, India accounts for 10-15%, respectively.
In the medium term, Apple could further diversify its production process. Vietnam already produces 90% of Apple Watches, while other Southeast Asian countries might become more significant players in the supply chain.
Image | Ameen ALmayuf
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