Behind the scenes, executives are panicking. Despite a cosmetic trade truce between the US and China signed on 12 May, the 20 per cent smartphone tariff remains. It was slapped on under the excuse of fighting China’s alleged role in fentanyl trafficking.
Other tariffs have been shaved, with one dropping from 125 per cent to 10 per cent, but smartphones were left swinging.
Chief executive Tim Cook has been shovelling iPhone production into India to head off disaster. Earlier this month, he claimed that “most iPhones shipped to the US in the April-to-June quarter would come from India.” Supply chain insiders quickly poured cold water on that, admitting Indian factories still lag behind Chinese ones on scale and quality.
Most Pro and Pro Max models, which pack better cameras and bigger batteries, are still produced in China. Indian production is limping behind.
According to Jefferies, out of the 65 million iPhones Job’s Mob flogged in the US last year, around 36 to 39 million were Pro or Pro Max models. Shifting that load to India any time soon is pure fantasy.
People involved in the supply chain told the Wall Street Journal: “It was prudent to assume that tariffs on Chinese goods, including smartphones, would ultimately be higher than those on goods from India and Vietnam,” confirming Job’s Mob’s mad scramble to shift assembly lines.
Internally, Apple knows it cannot wring enough cost cuts from its suppliers to dodge the tariffs. That leaves two options, it has to eat the loss or fleece customers.
Job’s Mob, true to form, picked the latter. Executives, though, are terrified of mentioning tariffs. When Amazon flirted with highlighting tariff costs to shoppers in April, the White House exploded and Amazon quickly backpedalled, claiming the idea “was never approved and is not going to happen.”
The incoming iPhone 17 range will start around €748 (converted from $799) and climb to €1,123 (converted from $1,199) for the top-end Pro Max. The new, thinner model is expected to replace the €841 (converted from $899) iPhone 16 Plus.
Cook warned earlier that current tariff policies would cost the company “$900 million in additional costs in this quarter, and more after that,” a problem Job’s Mob clearly intends to dump squarely on buyers.
Meanwhile, fantasies about mass US iPhone production have surfaced again. Reality, as usual, says otherwise.
TechInsights analyst Abhilash Kumar said, “By the end of 2026 or the beginning of 2027, we are optimistic that India will be capable of meeting US and Indian demand, but China will still be important” for sourcing components.
Jefferies analysts were blunter, calling the plan “a tall order” and suggesting Apple’s supply chain dreams are little more than PR smoke.