Apple reported better-than-expected first-quarter profits but cautioned investors about the growing impact of US tariffs on its operations. CEO Tim Cook announced that tariffs could cost the company approximately $900 million in the current quarter.
According to Cook, while the impact was initially “limited” at the start of the year, the situation has grown more complex.
“We are not able to precisely estimate the impact of tariffs, as we are uncertain of potential future actions prior to the end of the quarter,” news agency Reuters quoted Tim Cook as saying.
“Assuming the current global tariff rates, policies and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs,” he added.
To navigate these challenges, Apple is significantly shifting its production geography. “We expect a majority of iPhones sold in the US will have India as their country of origin,” Cook revealed, noting that Apple products currently enjoy exemption from Trump’s most severe reciprocal tariffs.
The ongoing trade tensions between the US and China have resulted in substantial tariffs from both sides, though high-end tech goods like smartphones have received temporary relief. Apple’s strategic response includes diversifying its manufacturing base. While China remains the primary production hub for products sold outside the US, Cook announced that Vietnam would become the primary source for iPads, Macs, Apple Watches, and AirPods destined for the US market.
“What we learned some time ago was that having everything in one location had too much risk with it and so we have, over time with certain parts of the supply chain, opened up new sources of supply,” Cook told analysts, suggesting this diversification strategy would continue.
Despite these challenges, Apple posted strong financial results with revenue of $95.4 billion and profits of $24.8 billion, driven by iPhone sales. However, regional performance varied, with China showing a 3% decline despite local stimulus measures.
Apple CEO Tim Cook on Thursday said that most US iPhones would be “sourced” in India amid rising tariff tensions between the States and China.
Replying to a question on on the mix of India sourced iPhones to the US, Apple CEO Tim Cook said, “For the June quarter, we do expect the majority of iPhones sold in the U.S. will have India as their country of origin, and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products also sold in the U.S.China would continue to be the country of origin for the vast majority of total product sales outside the U.S.”
He noted that trade tariffs targeting imports from China—where Apple manufactures many of its iPhones—could cost the company as much as $900 million. He, however, said that the exact impact of the tariffs remains difficult to predict.
Despite trade pressures, Apple posted stronger-than-expected earnings for the first three months of the year, with Cook noting that tariffs had only a limited impact on the company’s fiscal second-quarter results.
It reported solid earnings for the first three months of the year, posting a 4.8% increase in profit to $24.78 billion, or $1.65 per share, up from $23.64 billion, or $1.53 per share, a year ago.
Trump’s announcement of a 145% tariff on Chinese-made goods, including iPhones, triggered a rush among US consumers to buy devices ahead of expected price hikes. However, the surge in sales won’t be reflected in Apple’s earnings until the April-June quarter. The renewed trade war has intensified pressure on Cook to replicate the diplomatic maneuvering that previously helped shield the iPhone from tariffs during Trump’s first term.
Source: TOI