Apple details their $900 million tariffs cost this quarter
During Apple’s recent earnings call, CEO Tim Cook provided the most comprehensive overview to date regarding the company’s response to the extensive US tariffs implemented by President Trump and the potential ramifications for its financial performance. “Assuming the current global tariff rates, policies and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs,” Cook stated. However, he cautioned against extrapolating this figure to future quarters, noting, “This estimate should not be used to make projections for future quarters, as there are certain unique factors that benefit the June quarter.”
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Responding to questions during the Q&A session, Cook elaborated further on Apple’s strategic adjustments to its supply chain and the specific tariffs affecting its various product lines. He detailed the expected country of origin for the majority of Apple products sold in the US for the June quarter. “For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin, and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products also sold in the US,” Cook explained. He further noted that “China would continue to be the country or original for the vast majority of total product sales outside the US.” This shift in manufacturing locations is a direct response to the imposed tariffs, aiming to mitigate their impact on Apple’s bottom line.
Cook also provided a breakdown of the specific tariff categories impacting Apple during the June quarter. “If you look at the categories of tariffs that are applicable of us today, for the June quarter, most of our tariff exposure relates to the February IEEPA-related tariff at the rate of 20 percent, which applies to imports to the US for products that have China as their country of original,” he stated. Additionally, he highlighted a more recent tariff affecting specific product categories imported from China. “In addition, for China, there was an additional 125 percent tariff for imports of certain categories of products announced in April. For us, that’s some of our US AppleCare and accessories business, and brings the total rate in China for these products to at least 145 percent.” This significant tariff increase on accessories underscores the targeted nature of some of the trade measures.
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Interestingly, Cook also pointed out that Apple’s major product lines were currently exempt from the recently announced global reciprocal tariffs. “Also, for transparency and clarity, the vast majority of our products including iPhone, Mac, iPad, Apple Watch, and Vision Pro are currently not subject to the global reciprocal tariffs that were announced in April, as the Commerce Department has initiated a Section 232 investigation into imports of semiconductors, semiconductor manufacturing equipment, and downstream products that contain semiconductors,” he clarified. This temporary reprieve for core products contributes to the $900 million cost impact estimate for the June quarter. However, Cook refrained from making predictions about future production mixes and the long-term impact of tariffs, acknowledging the fluid nature of the Trump administration’s trade policies. “I wouldn’t want to predict the mix of production in the future, but I wanted to give you clarity for the June quarter.”
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