Trump: Apple Can Build in India, But Face US Tariffs on Sales
US President Donald Trump stated that while Apple is free to establish manufacturing plants in India, its products would then face tariffs if sold in the US. These remarks, made while signing executive orders to boost US nuclear power, signal a potential protectionist stance affecting global supply chains. This could significantly impact Apple's manufacturing strategy, India's ambitions as a global manufacturing hub, and future US-India trade dynamics.
Unpacked:
Apple is shifting iPhone assembly to India primarily to avoid US tariffs on Chinese imports. Producing in India helps Apple manage costs amid global trade tensions, as US tariffs on China have reached up to 145%. Moving production also supports diversification of its supply chain and reduces dependence on China.
Even with a 25% tariff, manufacturing iPhones in India remains cheaper for Apple than producing them in the US. Assembly in India costs about $30 per device, while US production could cost around $390 per device. Thus, Apple is likely to continue Indian production and may absorb or partially pass on tariffs to consumers.
India stands to benefit from Apple’s manufacturing shift, as it positions the country as a major electronics producer. Increased investment and jobs can boost India’s manufacturing sector. However, US tariffs could limit export growth to the US, challenging India’s efforts to become a global export hub.
Potential US tariffs on Indian-manufactured Apple products could create trade tensions between the two countries. While India may seek to attract more manufacturing, increased barriers could prompt negotiations or retaliatory measures, impacting broader trade and economic cooperation between the US and India.