Apple says Trump import tariffs will increase its costs by $900 million this quarter

On the quarterly earnings call today, Apple gave some color on the impact of tariffs on its business. Most notably Apple CEO Tim Cook said that in the current quarter, April through June, the company will see costs of about $900 million assuming the current tariff policy remains for the whole quarter.

Apple warned the figure could change — higher or lower — if administration changes tariff policy unexpectedly over the course of the quarter. It also said that costs in future quarters could be higher, still.

Apple just reported earnings for the January though March period. For that period, Apple says tariffs had limited impact. That’s not much a surprise given the major Trump reciprocal tariffs were not instated until April.

However, Apple will incur costs in the range of $900 million in the period April through June, as a result of the current tariff policy.

Here’s the full quote from Tim Cook from the earnings call, relating to tariffs:

Now let me walk you through the impacts of tariffs in the March quarter and give you on what we expect for the June quarter. For the March quarter, we had a limited impact from tariffs as we were able to optimize our supply chain and inventory. For the June quarter, currently we are not able to precisely estimate the impact of tariffs as we are uncertain of potential future actions prior to the end of the quarter. However, for some color, 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. This estimate should not be used to make projections for future quarters, as there are certain factors that benefit the June quarter. For our part, we will manage the company the way we always have, with thoughtful and deliberate decisions, with a focus on investing for the long term, and with dedication to innovation and the possibilities it creates.

As it stands right now, Apple has secured reciprocal exemptions on major elements of its product lines as of mid-April, including iPhone, iPad and Mac. However, Apple products sold in the June quarter were mostly imported in February, where Chinese imports were subject to approximately 20% tariff rates.

Looking forward, Apple expects the country of origin for the June quarter for most of its products sold in America to not be China. Cook said that for June, most iPhones sold in the United States will have been imported from India, and similarly it will be sourcing other products like iPad and Mac from Vietnam. This will help further minimize tariff impacts, as the highest levies are imposed on China.

China will continue to be the primary source of devices to be sold in non-US markets.

Here’s the full quote for context on the current quarter tariff impacts:

The existing tariffs that apply to Apple today are based on the products country of origin, as you allude to. For the June quarter, we do expect the majority of iPhones sold in the U.S. will have end 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 U.S. China would continue to be the country of origin for the vast majority of total product sales outside the U.S, and so, if you look at the categories of tariffs that are applicable to 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 U.S. U.S. for products that have China as their country of origin.

In addition, for China, there was an additional 125% tariff for imports of certain categories of products announced in April, and for us, that’s some of our U.S. AppleCare and accessories businesses and brings the China for these products to at least 145 percent. 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 standards. 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, and so if you, for the June quarter, as I talked about in the In my opening comments, we estimate the impact, assuming that the current global tariff rates policies and applications don’t change for the balance of the quarter to be 900 million to our costs. I wouldn’t want to predict the mix of production in the future, but I wanted to give you clarity for the June quarter of, you know, where the country of origins are so you can use that for your modeling.

The tariff situation is evolving rapidly, but Apple is clearly doing everything it can to mitigate the effects.