Apple's India Manufacturing Strategy Faces New Hurdle Amid Donald Trump's Tariff Threat

Apple Inc.’s aggressive push to scale its manufacturing capabilities in India is being closely watched across the global business ecosystem. But a fresh twist in the tale has emerged: U.S. President Donald Trump, in a bold campaign remark, has called for a 25% tariff on all Apple products not manufactured within the United States.

This announcement has significant implications—not just for Apple’s bottom line—but also for India’s role in global supply chains, the future of U.S.-India trade ties, and for thousands of MSMEs operating in India’s electronics manufacturing sector.

Apple’s Strategic Shift to India: A $40 Billion Pivot

In recent years, Apple has been steadily shifting a portion of its iPhone production to India. The reasons are clear:

• Cost efficiencies: Assembling an iPhone in India is estimated to cost as low as $30 in local labor, compared to $390 in the U.S.

• Policy support: Under India’s Production Linked Incentive (PLI) schemes, global brands like Apple have access to tax incentives, fast-tracked clearances, and export facilitation.

• Risk diversification: Apple is reducing its dependence on China due to geopolitical uncertainties and supply chain disruptions.

According to industry estimates, 25% of all iPhones will be made in India by the end of 2025, with key suppliers like Foxconn, Pegatron, and Wistron expanding their Indian facilities.

Trump’s 25% Tariff Threat: What’s at Stake?

Donald Trump’s recent campaign trail declaration to impose a 25% tariff on iPhones not assembled in the U.S. has shaken up boardrooms and market analysts alike.

Key impacts:

1. Profit Margin Pressure: A 25% tariff could translate to a $70–$80 hike per iPhone for U.S. consumers, unless Apple absorbs the cost.

2. Manufacturing Math Still Favors India: Even with tariffs, the net cost of an Indian-assembled iPhone will remain cheaper than one built in the U.S. due to labor cost differentials. As per GTRI, even post-tariff, Made-in-India iPhones can be $250–$300 cheaper than their American-made counterparts.

3. Global Supply Chain Confusion: If implemented, this move could upend supply chain strategies of not just Apple, but other tech giants relying on Indian and Southeast Asian manufacturing hubs.

India’s Electronics Ecosystem: A Collateral Victim?

Apple's presence in India isn’t just about a few assembly lines. It has led to the rise of an entire ecosystem of component suppliers, MSMEs, logistics providers, and skill development centers.

• Foxconn’s Chennai plant alone has over 35,000 employees, with over 60% being women.

• Over 200 Indian MSMEs are estimated to be part of Apple’s local supply chain for plastics, precision tools, packaging, and assembly services.

A tariff regime targeting India-produced Apple devices could cause economic ripples across India’s MSME network, which is just starting to benefit from high-tech manufacturing partnerships.

India-US Trade Talks: At a Crossroads?

Trump’s remark also risks derailing the momentum of the ongoing India-U.S. strategic trade talks, which aim to double bilateral trade to $500 billion by 2030.

According to trade analysts:

• The 25% tariff proposal violates the spirit of WTO rules and bilateral trade fairness.

• It could cause a diplomatic strain, especially when both countries are working towards deeper cooperation in semiconductors, defense, clean energy, and digital trade.

• If implemented, it may push India to explore alternate trade partnerships, particularly in Europe and the Middle East.

Trade experts believe this policy—if pursued—will turn into a litmus test for India’s resilience as a manufacturing hub in the face of shifting geopolitical tides.

Industry Voices: Balancing Risk with Vision

Indian telecom industry veteran, NK Goyal, Chairman of the Telecom Equipment Manufacturers Association (TEMA), expressed that Apple will not exit India despite recent statements and pressure to move manufacturing. He argues that Apple is already deeply committed to India, with significant investments in manufacturing and exports. 

Speaking to SMEStreet, Naresh Verma, industrialist from Faridabad and a seasoned global trade expert said:

“Trump’s statement is a wake-up call. While it’s politically charged, businesses must prepare for regulatory volatility. For India, it’s time to deepen local value addition and reduce export dependence on any single geography.”

Similarly, local entrepreneurs in the MSME space see both risk and opportunity.

“If Apple slows down, other global OEMs might rethink their India plan. But this also gives us the incentive to build indigenous capacity and attract EU-based brands,” said Karan Bhargava, founder of a Noida-based electronics MSME.

Resilience Over Retraction

Apple’s India manufacturing story is not just about cheaper phones—it is about a paradigm shift in global manufacturing. While Trump’s proposed tariffs may ruffle feathers, the fundamentals of cost efficiency, talent availability, and policy backing still make India an irreplaceable part of Apple’s long-term playbook.

However, the next few months will be crucial. Much depends on the stance of U.S. trade authorities, Apple’s lobbying power, and India’s diplomatic agility in converting this moment of friction into an opportunity for deeper trade cooperation.

Stay tuned for an upcoming SMEStreet exclusive analysis on: How India's PLI Scheme will help Apple India's manufacturing intiative.