US tariff to hit iPhone production expansion, electronics exports

US President Donald Trump's announcement of 25% tariff on all goods coming from India starting August 1, plus an unspecified penalty, is expected to impact Apple's plans to expand iPhone manufacturing in India as well as export of other electronics to the US.

The move comes at a time when Indian electronics production is reeling under pressure due to restrictions imposed by China on supply of several critical components, capital goods and even skilled technology professionals.

According to industry experts, while Chinese restrictions may slow down production, US tariff will impact exports of electronics from India.

"Today's sudden announcement of 25% tariffs on exports from India to the US will certainly hit Apple's plan of making India as a large export hub for iPhone exports to US," IDC India, South Asia & ANZ, Associate Vice-President for devices research, Navkendar Singh, said.

He said the US makes up around 25% of iPhone shipments for Apple -- around 60 million per annum.

"To meet the iPhone demand in the US from iPhone assembled in India requires significant manufacturing expansion in India, which will be directly impacted by these new tariffs," Singh said.

According to multiple sources, Apple plans to increase iPhone production to 60 million units this year from about 35-40 million units that it produced in 2024-25.

Apple CEO Tim Cook, during the earnings call for the second quarter ended March 29 had announced that all iPhones sold in the US during the April-June period will be shipped from India.

India-made iPhones are assembled in Taiwanese contract manufacturer Foxconn's factory in Tamil Nadu.

"For Apple, near-term challenges include higher costs on India-assembled iPhones exported to the US, potentially dampening demand and prompting recalibration of its supply chain. While some long-term shifts towards US-based production are in motion, India will remain a critical lynchpin in Apple's global strategy," CyberMedia Research, Industry Research Group (IRG), Vice President (VP), Prabhu Ram said.

An emailed query sent to Apple did not elicit any reply.

Ram said China's export restrictions present near-term headwinds to India's electronics manufacturing ambitions, particularly in critical materials and components. India must intensify its efforts to reduce upstream dependencies and accelerate the build-out of a resilient, end-to-end supply chain.

Industry players remain confused if the 25% duty announced by Trump will be imposed in addition to the existing 10% baseline tariff.

The 10% tariff, which currently applies to most Indian goods barring a few, was announced by Trump on all countries on April 2.

Electronics components bodies Elcina, Secretary General, Rajoo Goel, is of the view that the US will impose 15% additional tariff over 10%.

"A 15% increase in import duty will definitely impact our exports of electronics, a major share of which is finished mobiles. But there are several electronic assemblies for telecom, auto, consumer equipment and some components which will be adversely impacted," Elcina Secretary General Rajoo Goel said.

He said China's hostile steps can impact the supply side and increase costs as production will be impacted, at least in the short term till alternatives are developed.

"Increase in tariffs by the US will affect exports, shrinking demand. Both these steps could result in slowing growth," Goel said.

IESA and SEMI India President Ashok Chandak said, "India does not have any major advantage compared to other Asian countries anymore if the 25% tariff above baseline 10% is continued. However, it also underlines the urgency for India's electronics sector to diversify export markets, deepen domestic markets, develop brands and products, and move up the value chain to reduce dependency on price-sensitive, tariff-exposed exports."

As India does not make semiconductors, it won't be affected in the short term, he said, adding that India needs to come out of the shadow of China to be competitive.