US' 25% tariff to hit iPhone exports, disrupt India's electronics shipments

Apple plans to boost iPhone production in India despite US tariffs. Experts warn of export challenges, cost pressures, and the need for India to strengthen its electronics supply chain

US President Donald Trump’s decision to impose a 25 per cent tariff on all Indian exports from August 1, along with an additional unspecified penalty related to purchases of Russian energy and military equipment, is expected to disrupt Apple’s ambitions to expand iPhone manufacturing in India and increase electronics exports to the American market.

 

India currently accounts for about 36 per cent of US smartphone imports, driven in large part by Apple’s growing production footprint in the country.

 

Industry analysts, according to a report by the Press Trust of India, warned that while Chinese export controls may pose manufacturing challenges globally, the US tariffs will directly impact outbound shipments from India.

 

 

“Today’s sudden announcement of 25 per cent tariffs on exports from India to the US will certainly hit Apple’s plan of making India a large export hub for iPhones to the US,” said Navkendar Singh, associate vice-president for devices research at IDC India, South Asia & ANZ.

 

Singh noted that the US accounts for about 25 per cent of Apple’s global iPhone shipments — roughly 60 million units annually.

 

“To meet iPhone demand in the US from devices assembled in India requires significant manufacturing expansion here, which will be directly impacted by these new tariffs,” he added. 

Apple is looking to ramp up its iPhone production to around 60 million units in 2025-26, a significant increase from the estimated 35-40 million units produced in the previous financial year, according to the PTI report.

 

During Apple’s earnings call for the second quarter ending March 29, CEO Tim Cook had announced that all iPhones sold in the United States between April and June would be shipped from India. These devices are assembled at the Tamil Nadu facility operated by Taiwanese manufacturing giant Foxconn.

Trade headwinds and supply chain shifts

Prabhu Ram, Vice President of the Industry Research Group at CyberMedia Research, pointed to short-term hurdles arising from the new US import duties.

 

“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,” he said.

 

Apple has, so far, not issued any comment on the matter.

 

Ram also noted that China's recent export restrictions could slow India's progress in electronics manufacturing by limiting access to key materials and components. He emphasised the need for India to strengthen its upstream capabilities and create a robust, end-to-end supply chain.

Confusion over tariff structure

The industry remains uncertain about the structure of the new 25 per cent tariff announced by former US President Donald Trump, and whether it will be levied in addition to the existing 10 per cent baseline duty imposed earlier in April.

 

Rajoo Goel, Secretary General of Elcina, believes that the 25 per cent rate includes an additional 15 per cent on top of the base duty. "A 15 per cent 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," he said.

 

Goel warned that China's aggressive moves could disrupt supply chains and raise production costs in the short term, until alternative sources are developed. “Increase in tariffs by the US will affect exports, shrinking demand. Both these steps could result in slowing growth,” he added.

Urgency for diversification

Ashok Chandak, President of IESA and SEMI India, highlighted the implications for India’s position in the global electronics landscape. “India does not have any major advantage compared to other Asian countries anymore if the 25 per cent tariff above baseline 10 per cent 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.”

 

Chandak added that since India does not manufacture semiconductors domestically, it may avoid immediate impact from the latest policy changes, but long-term competitiveness would require moving beyond China’s shadow.