Apple is expecting tariffs to cost the company around $1.1 billion in the July to September quarter, according to CEO Tim Cook during the company’s earnings call with investors. This marks an increase from the previous quarter, where the actual tariff costs came to about $800 million, lower than the earlier projection of $900 million shared in May.
These cost estimates are based on current tariffs and trade policies and could fluctuate. Cook explained that most of the tariffs Apple faces are due to the International Emergency Economic Powers Act. As part of a recent trade agreement between the United States and China, a 30 percent tariff on Chinese imports was introduced. This agreement, which also reduced reciprocal tariffs from 125 percent to 10 percent and added a 20 percent duty related to fentanyl, remains in effect until August 12.
Despite concerns over tariffs, Cook suggested they were not the primary factor driving strong sales. “If you look at iPhone, the 16 family grew double digits, as opposed to the 15 family from the year-ago quarter,” he said. “And so we did set an upgrade record … I think it directly is because of the strength of the product.”
iPhone sales rose by 13 percent year-over-year, generating $44.5 billion in revenue, accounting for nearly half of Apple’s total revenue of $94 billion this quarter.
Tariffs, however, continue to affect Apple’s operations. Even with efforts to diversify manufacturing to countries like India and Vietnam, both regions still face tariffs of 25 percent and 20 percent, respectively. Nearly half of the iPhones sold in the United States are manufactured in India, while Macs, iPads, and Apple Watches sold in the U.S. are primarily made in Vietnam.
Previously, President Trump criticised Apple for shifting its supply chain to India and threatened a 25 percent tariff unless production returned to the United States.
Reaffirming Apple’s commitment to the U.S. market, Cook stated the company plans to invest $500 billion in the country over the next four years, with a focus on building chips and semiconductors across various locations.
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