Apple escapes major supply chain crisis at last minute as Trump eases tariff blow

President Donald Trump’s administration backed down from imposing harsh tariffs that threatened to destabilize Apple’s global supply chain, giving the tech giant a key lifeline during a tense trade standoff with China.

The company , which relies on a tightly interwoven global supply network centered in China, had been bracing for significant disruptions, which could result in increased consumer prices, product delays, and declining margins.

However, under pressure from industry leaders and global markets, the Trump administration announced a last-minute exemption on key tech products. The move effectively spared Apple from being caught in the crossfire of the escalating U.S.-China trade war.

However, the firm still faces uncertainty despite the exemption because of possible changes to future policies and the necessity to think about shifting production outside of China, which could result in retaliation from the U.S.

Apple scored a major win with exemption from tariffs on Chinese-made goods

The Trump 125% tariffs, originally set to target billions worth of Chinese-made goods—including critical components for iPhones, iPads, and MacBooks threatened to upend Apple’s supply chain as seriously as the Covid snarls did five years ago.

Therefore, its exemption was a significant victory that excluded several well-known consumer electronics. Another victory was the removal of a 10% tariff on goods imported from other countries.

Although a 20% tariff on China is still in place, and a new, reduced “sectoral tariff” may still be applied to products containing semiconductors, the move benefited Apple and the consumer electronics sector, which still depended significantly on the Asian country for manufacturing.

Apple races to shift iPhone production amid tariff threats

Apple had a plan in motion before the latest exemption. The company intended to shift more of its iPhone production to India, where devices would face significantly lower tariffs.

Executives saw this as a practical, short-term fix to avoid steep duties on Chinese-made iPhones and prevent major price hikes. With Indian factories on track to produce over 30 million iPhones annually, Apple believed that output could cover a substantial portion of U.S. demand.

The company sells roughly 220 to 230 million iPhones globally annually, with about a third going to American consumers.

Executing that transition, however, wouldn’t have been easy — especially with the iPhone 17 already nearing production, much of it still planned for China. The iPhone maker would have needed to swiftly ramp up iPhone 17 production in India or another region to avoid the China tariffs — a significant undertaking under tight timelines.

Even now, uncertainty lingers. U.S. trade policy could shift again, and Apple may eventually need to make more aggressive moves.

China ties complicate Apple’s diversification strategy

China’s role in Apple’s supply chain remains dominant. According to Morgan Stanley, around 87% of iPhones are still assembled in China, along with 80% of iPads and 60% of Macs. These products together account for roughly 75% of Apple’s annual revenue.

That said, Apple has made quiet progress in diversifying its supply chain. Nearly all Apple Watches and AirPods are now built in Vietnam, and production of some iPads and Macs has expanded to Malaysia and Thailand. The U.S. is also a major market for these devices, accounting for 38% of iPad sales and about half of Mac, Watch, and AirPods revenue, Morgan Stanley estimates.

A full break from China — Apple’s decades-old manufacturing base remains highly unlikely. While President Trump has pushed for iPhones to be made in the U.S., the lack of domestic manufacturing and engineering infrastructure makes that an unrealistic goal in the near term.

Since the April 2 announcement of sweeping new tariffs, Apple and other tech companies have ramped up lobbying efforts in Washington to secure exemptions. Those conversations have become even more urgent after a fresh wave of retaliatory measures between the U.S. and China led to an effective 145% import duty on Chinese-made goods.

The stakes were especially high after Trump paused additional tariffs on other countries. That gave an advantage to competitors like Samsung, which manufactures phones outside China.

Apple and other firms have argued that while they’re willing to invest more in the U.S., final assembly shouldn’t be the focus. Instead, they urge the government to prioritize high-value roles like semiconductor development and advanced manufacturing.

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