Since U.S. President Donald Trump’s admission into the Oval Office in 2025, the world is no stranger to the escalating trade wars between North America and other countries, especially America and China. This trade war, based on tariffs and taxes, does not just affect big businesses and corporate houses, but has a direct impact on prices and everyday products. This article delves into the fundamentals of tariffs, Trump’s administration and its effect on Apple, and why they matter to you.
The most basic question that comes to mind: What is a tariff? A tariff is a type of tax implemented by the government which is imposed on goods that are imported from another country. The core reasons for imposing this tax are the protection of domestic markets and revenue generation for the government.
The Start of Trump Tariffs
The tariff tax on Apple became a serious issue during the U.S.-China economic conflict that took root in January 2018 when Trump began imposing tariffs and trade barriers on China under the accusations of intellectual property theft, unfair subsidies to Chinese companies and trade imbalances. The conflict began with America imposing a 20% to 50% tariff on solar panels and washing machines, then adding a vast variety of products to this list, such as steel, aluminium, batteries, medical devices, satellites and several defence goods. In retaliation, the Ministry of Commerce of China imposed tariffs on around 128 diverse U.S. products, such as 20% on aluminium, aeroplanes, cars, pork, soybeans, and 15% on fruits, nuts, steel piping, etc. It was an attempt by the United States to pressure China into changing its trade practices, but instead, China placed its own tariffs on North American exports. Today, an eye-watering 145% tariff is imposed by the U.S. on all Chinese imports, while China is responding with 125% tariffs on U.S. commodities.
In this trade dispute, Apple found itself caught in the middle as the biggest victim of Trump’s rearrangement of the global trading order. Many of its products were at risk of being taxed because they were assembled in China, and used various Chinese hardware parts. This 145% burden would mean higher costs of business, potential price hikes, reduced profit, and possible changes in the supply chain to avoid tariffs. The economic crisis directly passes onto the consumers in the form of higher prices, slower product launches, fewer or poor-quality features and job cuts. In an example of a potential price increase, analysts at investment bank UBS have warned that the price of an iPhone 16 Pro Max (with 256GB of storage) could rise by 79% from $1,199 to about $2,150, based on a total tariff of 145%. iPhones aren’t the only Apple products that could rise in price. More than 50% of Apple’s Mac products and 80% of its iPads are assembled in China, according to US investment bank Evercore. Apple watches are largely put together in Vietnam, which must pay a 10% tariff under Trump’s 90-day pause, rising to 46% afterwards.
Apple's Countermeasures
To combat these major issues, Apple has made efforts to diversify its manufacturing footprint to India and Vietnam, but most of its production remains in China. The tech company has also taken a major step of chartering cargo flights from India to the U.S. to fly iPhones from its Indian plants to America in an attempt to dodge Trump’s tariffs. Apple has ferried 600 tons of iPhones to the U.S. from India since March after establishing manufacturing units in India that are operated by Foxconn and Tata.
In order to meet the surge, Foxconn has reportedly amplified its Chennai plant operations, even running on Sundays, which are typically universal holidays. As its long-term strategy continues to rely on supply chain diversification, Apple plans to increase output in India by 20% in the upcoming months. In response, Trump threatened a new 26% tariff on Indian imports, but its effect was mild due to the President’s 90-day hold on taxes. The Wall Street Journal reported this week that Apple plans to send more iPhones to the US from India as a “short-term stopgap” while the company attempts to secure an exemption from the China tariffs.
According to Counterpoint Research, Apple sells over 220 million iPhones annually worldwide, with the US continuing to be its biggest and most profitable market. A sustained tariff battle can put the business in a difficult position where it must decide between increased consumer costs and shrinking profit margins. Although it has been proposed, experts think that producing iPhones in the US is not feasible, at least not until 2028.
Taking a closer look at Apple’s finances, in the December quarter, Apple posted a 4% increase in overall revenue, hitting $124.3 billion, slightly above expectations. Net profit rose 7.1% YoY to $36.33 billion, while the company reported a record gross margin of 46.9%, driven by strong performance in Mac and iPad sales. However, iPhone revenue fell short of expectations at $69.14 billion, and China sales dropped 11.1%, the sharpest decline since last year. For the March quarter, Apple forecasted low to mid-single-digit revenue growth, while low-double-digit growth was anticipated for services. Apple’s services segment is growing steadily, yet it cannot fully offset the threat posed by potential iPhone price hikes.
The iPhone maker’s stocks have been on a declining trend so far this year. It started the year with a market cap of $3.67 trillion and has since seen a sharp decline, with market capitalization falling to $2.97 trillion on April 10th, according to Macrotrends data. In just a few months, this amounts to a value loss of almost $700 billion, or roughly 19% of its market capitalisation.
However, in the latest turn of events, Trump has exempted smartphones, computers and electronics from Chinese tariffs, giving a firm boost to Apple and other such tech giants. Thus, consumers must no longer worry about the concerning surge in device prices. Shortly after Trump’s tariff announcement on April 2, Apple’s shares fell 23%. However, as optimism for exemptions grew, shares began bouncing back up again.
Conclusion
The tariff tax on Apple is a great example of how government policies can have a ripple effect across industries, countries and even your wallet. While tariffs aim to protect local economies, they can also raise prices, hit businesses, and change how global companies like Apple function. It shows us the far-reaching effects of globalization- how interconnected the world economy is, and how one decision can affect countries all over the globe. For Apple, this isn’t just a trade war, it’s a crisis where the company must rethink the entire way it makes and sells its products.
Written by – Manya Agarwal
Edited by – Vania Jain
