Apple Inc. managed to avoid its most disruptive supply chain crisis since COVID-19 through President Donald Trump’s final-hour decision to exempt tariffs on its products. The proposed 125% tariff on Chinese electronics from the administration created a potential crisis for Apple by endangering its production lines and increasing costs for iPhones and other essential products, including iPads, Macs, Apple Watches, and AirTags.
Late Friday night, the tech giant received favorable news when the federal government decided to exclude its core devices from the punitive tariffs. The proposed 10% blanket tariff on imports from other countries did not apply to these particular products. Apple’s manufacturing facilities have received temporary relief from immediate operational threats after the United States government decided to maintain a 20% tariff on Chinese electronics but exclude Apple’s core products from this measure.
Evercore ISI analyst Amit Daryanani stated that Apple received significant relief after its stock price dropped 11% during the previous month. Apple had recently accelerated its plans to relocate manufacturing to India with the objective of making 30 million iPhones per year to protect its American shipments from tariffs.
Still, the uncertainty isn’t over. The exemptions Trump grants remain procedural while he labels them temporary. Apple would need to execute a rushed supply chain transformation in case policy changes occur that would challenge its ability to retain product prices and meet delivery schedules. Beijing possesses the capability to strike back, which threatens to damage Apple’s Chinese business operations that contribute 17% to its total revenue.
The vast scale and operational efficiency of Chinese production make a complete separation from China unlikely for Apple even as it increases manufacturing in Vietnam, Thailand, and Malaysia. Apple experiences relief in the present moment, yet the company needs to remain flexible as the geopolitical situation remains unstable.
