Apple Warns of $900m Hit from Trump’s Tariffs
The ongoing trade tensions between the US and its trading partners, led by President Donald Trump’s tariffs, have resulted in a significant impact on corporate America. The latest to sound the alarm is tech giant Apple, whose chief executive, Tim Cook, warned that the company’s costs would increase by $900m in the quarter to the end of June due to the levies.
According to an interview with analysts on Thursday, Cook stated that "assuming the current global tariff rates . . . do not change for the balance of the quarter, and no new tariffs are added, we estimate the impact to add $900m to our costs". However, he also noted that the uncertain tariff environment had made it "very difficult to predict beyond June" how the levies would affect Apple’s costs.
The remarks made by Cook are the latest indication of how Trump’s tariffs are affecting the US’s largest companies. As reported by the Financial Times, fellow tech behemoth Amazon has added "tariff and trade policies" to the list of factors that pose a risk to its earnings, while McDonald’s has stated that economic jitters are weighing on its customers.
Trump announced steep "reciprocal" tariffs on a number of countries on April 2. Although the US has temporarily exempted smartphones from its 125 per cent "reciprocal" tariffs on China, Apple is still affected by an existing 20 per cent tariff on Chinese imports. As the Financial Times reported, Cook noted that in the quarter to the end of June, "we do expect the majority of iPhones sold in the US will have India as their country of origin". Vietnam will meanwhile supply Mac, Watch, and AirPods products for the US, while China will remain responsible for the "vast majority" of product sales outside of the US.
In a statement, Cook said, "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, not the whole thing . . . opened up new sources of supply". The Financial Times reported last week that Apple plans to shift the assembly of all US-sold iPhones to India as soon as next year.
Despite the warning, Apple reported robust demand for iPhones early in 2025. The company’s shares fell almost 4 per cent in after-hours trading on Thursday. Apple’s revenue for the quarter ending March 29 was $95.4bn, up 5 per cent year on year and slightly above consensus estimates of $94.6bn. Net income was $24.8bn, also slightly beating estimates of $24.5bn and up 5 per cent on the same period for the previous year.
Revenue for the iPhone, Apple’s flagship product, was $46.8bn, up 2 per cent year on year. However, China revenue fell slightly to $16bn, down 2.4 per cent, reflecting the competitive challenge Apple has faced from local smartphone makers in recent quarters. Its services business, which includes the App Store, iCloud, and Apple Pay, continued to show strong growth, rising 12 per cent to $26.6bn.
According to Financial Times, Apple chief financial officer Kevan Parekh stated that there had been no sign of a short-term uptick in consumer demand to get ahead of the April tariffs. "For the March quarter we don’t believe we saw any strong evidence of pull-ahead demand that impacted our results," Parekh said.
In China, the company had seen an improvement from the previous quarter in its results, Parekh noted, with sales "roughly flat" when adjusting for foreign currency changes. Apple’s China sales had fallen 11 per cent year on year in the previous quarter.
The Financial Times also reported that Apple’s board approved a 4 per cent increase in its dividend and up to $100bn in share buybacks, broadly in line with the previous year.
Source: Financial Times
