Apple Faces New Tariffs but Has Options to Soften the Blow [Kuo]

Apple is bracing for a significant challenge as the Trump administration rolls out new tariff policies targeting hardware exports to the US. According to a recent post by TF International Securities analyst Ming-Chi Kuo, these tariffs, set at 34% for China, 26% for India, and 46% for Vietnam, could reshape Apple's cost structure and production strategy. With the majority of its hardware assembly still tied to China, the company has several paths to mitigate the financial hit.Currently, 85-90% of Apple's hardware assembly happens in China, with the rest split between India and Vietnam. The new tariffs threaten to squeeze Apple's profitability. Kuo estimates that if Apple absorbs these costs without raising prices, its gross margin could drop by 8.5-9%. That's a hefty hit for a company known for its premium pricing and healthy margins.Shifting production offers one way out. By 2025, Kuo expects at least 15% of global iPhone production to move to India, up from 10-12% in 2024. If India and Vietnam can secure tariff waivers through new US trade deals, Apple could cut the gross margin impact to 5.5-6% without touching retail prices. Push India's share to over 30% of iPhone output with exemptions in place, and the damage shrinks further to just 1-3%.Continue ReadingShare Article:Facebook, Twitter, LinkedIn, Reddit, EmailFollow iClarified:Facebook, Twitter, LinkedIn, Newsletter, App Store, YouTube

Apr 3, 2025 - 16:56

Apple Faces New Tariffs but Has Options to Soften the Blow [Kuo]

Apple is bracing for a significant challenge as the Trump administration rolls out new tariff policies targeting hardware exports to the US. According to a recent post by TF International Securities analyst Ming-Chi Kuo, these tariffs, set at 34% for China, 26% for India, and 46% for Vietnam, could reshape Apple's cost structure and production strategy. With the majority of its hardware assembly still tied to China, the company has several paths to mitigate the financial hit.

Currently, 85-90% of Apple's hardware assembly happens in China, with the rest split between India and Vietnam. The new tariffs threaten to squeeze Apple's profitability. Kuo estimates that if Apple absorbs these costs without raising prices, its gross margin could drop by 8.5-9%. That's a hefty hit for a company known for its premium pricing and healthy margins.

Shifting production offers one way out. By 2025, Kuo expects at least 15% of global iPhone production to move to India, up from 10-12% in 2024. If India and Vietnam can secure tariff waivers through new US trade deals, Apple could cut the gross margin impact to 5.5-6% without touching retail prices. Push India's share to over 30% of iPhone output with exemptions in place, and the damage shrinks further to just 1-3%.

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