‘Way better to take 25% tariff hit…’: Apple exports 2.9 million iPhones from India to US despite Trump’s pressure; China sees big fall

US President Donald Trump’s directive to Tim Cook to shift iPhones production away from India doesn’t seem to be deterring Apple from shipping a higher number of smartphones from the country. Apple's suppliers delivered 2.9 million iPhones from India to the United States in April, showing a 76% year-on-year increase, according to Omdia research firm. This aligns with Apple’s strategy to fulfil US demand from India, despite Trump's increasing demands for local manufacturing. Apple anticipates comparable figures for May, as the company continues its production diversification away from China. According to an ET report, Omdia said that Chinese iPhone exports to the US declined by 76% to 900,000 units in April, compared to 3.7 million units the previous year. Counterpoint Research's preliminary assessments indicate Indian iPhone exports to the US in April ranged between 2.9-3 million units.The export figures for April showed a decrease from March levels, when the company worked intensively to meet the April 2 deadline for US retaliatory tariffs targeting countries with trade surpluses, particularly affecting China.Industry specialists indicated that Apple's transition towards India continues to gain momentum. They explained that the reduced export volume in April aligned with typical seasonal patterns, noting that shipments traditionally decrease during the April-June period, before new model launches in the September quarter.Apple faces a significant challenge following President Trump's recent warning about implementing a 25% tariff on imported iPhones if they are not manufactured within US borders."I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else," Trump wrote on Truth Social last week. "If that is not the case, a Tariff of at least 25% must be paid by Apple to the US."However, manufacturing iPhones within the United States would likely result in a dramatic price increase, with industry specialists suggesting that Pro models could exceed $3,000 per unit, compared to the current price of $1,119, due to increased labour expenses and intricate supply chain management for component procurement."In terms of profitability, it's way better for Apple to take the hit of a 25% tariff on iPhones sold in the US market than to move iPhone assembly lines back to the US," Ming-Chi Kuo, Apple analyst at TF Securities, Hong Kong told the financial daily.Also Read | ‘Don’t want you building in India’: Donald Trump’s clear message to Apple CEO Tim Cook to 'Make in US'; says India can take care of themselvesIn a recent development, Foxconn (Hon Hai), Apple's manufacturing associate, declared a new £1.5 billion investment to enhance its Chennai operations for increased production. Foxconn has also established a new unit in Karnataka, set to begin iPhone deliveries from June.In parallel, Tata Electronics, which ranks as Apple's second-largest iPhone manufacturer in India, is increasing production capabilities at its Hosur site for both enclosures and comprehensive iPhone assembly. The company has also secured controlling interest in Pegatron's facility, Apple's third supplier in the country.Industry observers suggest that India's production capabilities may not expand rapidly enough to completely satisfy US demand for Apple products.Data from Omdia indicates that whilst the US market demands approximately 20 million iPhones quarterly, India's projected capacity will fulfil only about 80% of this requirement by 2026.Also Read | Why Apple won’t find it easy to move iPhone production from India to USAccording to industry experts, India's primary challenge lies not in technical capabilities but in achieving necessary production volumes. Omdia notes that with India now producing premium Pro and Pro Max iPhone variants, significant progress has been made in workforce development.Industry observers note that Apple is carefully managing relationships across its three crucial markets – China, US and India – which serve both as consumer bases and essential components of its production network."China remains deeply entrenched in Apple's manufacturing ecosystem, home to over 200 key suppliers. Shifting assembly to the US is not a logical move. It would mean attempting to relocate a tightly interwoven supply chain," said Sanyam Chaurasia, analyst at Canalys (now part of Omdia).