On May 23, 2025, President Donald Trump shook up the tech world with a Truth Social post calling on Apple to make iPhones distributed in the U.S. domestically or risk a 25% tariff on iPhones produced in India or elsewhere. This incendiary call to Apple CEO Tim Cook takes issue with the company's aggressive expansion of iPhone assembly in India, where it now produces 15-20% of its worldwide supply. Even in the face of a tariff threat, analysts and experts believe Apple will not give up its 'Make in India' strategy, fueled by economic benefits, geopolitical trends, and supply chain durability in the long term. This article delves into why Apple is likely to double down on India when Trump is urging U.S.-made iPhones and how it is shaping the global tech map.
The 'Make in India' Momentum
Apple's shift to India commenced in 2017, led by trade tensions between the United States and China and India's efforts to become a global production powerhouse under the Production Linked Incentive (PLI) program of Prime Minister Narendra Modi. Apple's contract manufacturers—Foxconn, Tata Electronics, and Pegatron—made $22 billion worth of iPhones in India as of March 2025, a 60% rise from last year, representing almost one out of every five iPhones worldwide. India's position as a manufacturing hub has increased significantly with Apple shipping $8-9 billion of iPhones to the U.S. this year, making it a pillar of Apple's plan to diversify away from China, where 80-90% of iPhones continue to be manufactured.
India is attractive due to its cheaper labor costs of $230 a month versus $2,900 in the U.S., as well as government incentives such as almost $1 billion of PLI subsidies paid to Apple's partners between 2022 and 2025. Foxconn's recent $1.5 billion investment in a Chennai display factory and a 300-acre iPhone factory campus with dormatories for 30,000 employees is a commitment for the long haul. Apple will manufacture 25% of the world's iPhones in India by the year 2026, a goal that is consistent with Tim Cook's May 2025 earnings call declaration that the majority of U.S.-destined iPhones will soon come from India.
Trump's Tariff Threat: A Political Power Play
Trump's threat to impose a 25% tariff, issued on May 23, 2025, aims at the India-manufactured iPhones of Apple and other phone manufacturers such as Samsung, calling for fairness in trade policy. The frustration of the president is due to Apple's turn away from China to India to avoid more tariffs—now 54% on Chinese products versus 26% on Indian imports, with a 90-day tariff hold on India until July 2025. The dream of Trump is to bring precision manufacturing home to the U.S., with Commerce Secretary Howard Lutnick contending that robots and talented American workers could substitute for Asia's cheap labor.
But Apple's reaction is defiant. In March 2025, it flew in 600 tons of iPhones worth an estimated 1.5 million phones from India to the U.S. ahead of looming tariffs, using a "green corridor" to reduce customs clearance from 30 hours to six. This calculated maneuver, combined with Apple's $500 billion U.S. investment commitment for AI servers and R&D (not iPhone production), shows a measured response to fend off Trump's pressure without disrupting its worldwide supply base.
Why India Is Still Appealing
Despite Trump's tariff slap, a number of reasons make India an appealing option for Apple:
Cost Advantage: The Global Trade Research Initiative (GTRI) indicates that even with a 25% tariff imposed by the U.S., production in India is still more affordable than the U.S. due to cheaper labor and operational costs. A China-made iPhone costing $1,000 is hit with a 54% tariff, raising the U.S. price to $2,000, and one made in India with a 26% tariff would cost $1,250. Making it in America might drive it to $3,500, Wedbush analyst Dan Ives said, making it a "fairy tale" because of runaway costs.
Geopolitical Security: India's more amicable trade relationship with the U.S. compared to China provides a cushion for increasing tensions in the U.S.-China chip war. India's 26% tariff, suspended, is significantly less than China's 54%, and ongoing U.S.-India trade negotiations have the potential to further facilitate terms. Apple's move to India also supports its desire to diversify away from China, where pandemic lockdowns and geopolitical uncertainty derailed production. X posts show positivity towards India's contribution, with people such as @theskindoctor13 mentioning investments and employment.
Government Support and Infrastructure: India's PLI initiative has paid more than $1 billion to Apple's producers, with 75% going to Foxconn, Tata, and Pegatron. The government's initiative to position India as an electronics giant, combined with infrastructure such as Foxconn's campus in Chennai, underpins Apple's growth. An Indian senior official said Apple's supply chain considerations are decided after years of planning and are unlikely to be changed by "one stray comment" by Trump.
Market Growth Potential: India is not only a manufacturing base but also an emerging consumer market. Apple's retail presence, including Delhi and Mumbai stores, and high demand for iPhones underpin its commitment. Local production also lowers Indian import duties for consumers, making Apple more competitive against competitors like Xiaomi.
Challenges and Risks
Trump's tariff threat isn't without effect. Apple shares lost 3-4% on May 23, 2025, as investors worried about possible price increases or squeezed profit margins. UBS analyst David Vogt estimates the imposition of a 25% tariff could reduce Apple's earnings by 51 cents per share, while passing on the cost is more practical than moving production elsewhere. Analyst Ming-Chi Kuo contends that consuming the tariff is cheaper than American manufacturing, which does not have the skilled workers and facilities for mass production. Tim Cook himself pointed out the limited capacity of the U.S., saying China's tool-and-die makers far outnumber American tool-and-die makers.
Legal risks also hang in the balance. Tariffing Apple directly would be illegal under trade law, and the International Emergency Economic Powers Act (IEEPA) is being taken to court. Apple may fight tariffs in court or win exemptions through negotiations, as in the case of smartphone tariff exemptions in April 2025. At the same time, India's red tape, as an issue brought up on X by @theskindoctor13, would hamper Apple's growth if not resolved.
The Bigger Picture: Global Supply Chains and U.S.-China Tensions
Apple's India plan is a bet against the U.S.-China chip war, where Chinese imports (125% as of May 2025) and limits on companies like Huawei make supply chains tricky. Lower tariffs and diplomatic neutrality of India make it a safer bet than China or even Vietnam, which has a 46% tariff. Yet, Trump's emphasis on American manufacturing is consistent with efforts to lock down semiconductor supply chains, such as AMD's Computex 2025 announcements and U.S. investment in AI infrastructure.
Posts on X, such as @MarioNawfal's, report that Apple's India shift may cut 3% from China's GDP, highlighting the geopolitical ramifications. India's growing role, however, is good for its economy, with iPhone exports growing to $1 lakh crore for April to January 2025, from $60,000 crore the previous year. Apple's pledge, reconfirmed by government sources to @CNBCTV18Live, indicates strength against Trump's blackmail.
Why Apple Stays in India
Apple's 'Make in India' plan is too deep-rooted to be turned around overnight. The economic argument—lower costs, beneficial tariffs, and government incentives—trumps the 25% tariff effect. Geopolitically, India provides stability in the midst of U.S.-China tensions, and its emerging market and export opportunities fit well with Apple's long-term strategy. Instead of moving to U.S. production, which analysts like Dan Ives find "not feasible," Apple will probably absorb tariffs or strike trade concessions while increasing in India.
Trump's threat might shake markets, but Apple's investments and airlifting strategy, such as Foxconn's $1.5 billion factory, indicate a company playing the long game. As India solidifies its position as a global tech hub, Apple's commitment could reshape supply lines, spur India's economy, and upend Trump's vision of a U.S.-centric manufacturing renaissance.
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