Apple says tariffs will cost it at least $900 million this quarter

Apple estimates that US tariffs will cost it at least $900 million this quarter, primarily due to increased costs from China-based products.
The majority of iPhones sold in the US will have India as their country of origin, while Vietnam will be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products also sold in the US.
China remains the country of origin for the vast majority of total product sales outside the US, with tariffs applying to imports from China at a rate of 145% for certain categories of products.
The global reciprocal tariffs announced in April do not currently apply to most Apple products, as the Commerce Department is investigating imports of semiconductors and related products.
Apple plans to manage its business with “thoughtful and deliberate decisions” despite potential tariff costs rising once unique factors at play in the June quarter no longer apply.

During Wednesday’s earnings call, Apple CEO Tim Cook went into the most detail yet on how the company is responding to the far-reaching US tariffs imposed by President Trump — and the potential impacts on its business. “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,” Cook said. “This estimate should not be used to make projections for future quarters, as there are certain unique factors that benefit the June quarter,” he clarified.

Once the call moved on to the Q&A section, Cook expanded quite a bit further, and I’ve transcribed that entire answer below:

For the June quarter, we do expect the majority of iPhones sold in the US will have 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 US. China would continue to be the country or original for the vast majority of total product sales outside the US.

If you look at the categories of tariffs that are applicable of 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 US for products that have China as their country of original. In addition, for China, there was an additional 125 percent tariff for imports of certain categories of products announced in April. For us, that’s some of our US AppleCare and accessories business, and brings the total rate in 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 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. For the June quarter, as I talked about 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.

So there you have it. It sounds as though Apple believes tariff costs might rise once those “unique factors” at play in the June quarter no longer apply, but the company isn’t yet confirming as much. “For our part, we will manage the company the way we always have, with thoughtful and deliberate decisions,” Cook said.

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Q. What is Apple’s estimated cost impact from US tariffs for the June quarter?

A. Apple estimates that the impact will be at least $900 million to its costs.

Q. Why did Apple CEO Tim Cook provide more detail about the company’s response to US tariffs during the earnings call?

A. Cook provided more detail because he wanted to give clarity on how the company is responding to the tariffs and their potential impacts on business.

Q. Which countries are expected to be the country of origin for most iPhone sales in the US, and which products sold in the US will have Vietnam as their country of origin?

A. For the June quarter, the majority of iPhones sold in the US are expected to have India as their country of origin, while almost all iPad, Mac, Apple Watch, and AirPods products sold in the US will have Vietnam as their country of origin.

Q. Which category of tariffs applies to most of Apple’s tariff exposure for the June quarter?

A. Most of Apple’s tariff exposure relates to the February IEEPA-related tariff at a rate of 20 percent, which applies to imports from China.

Q. What is the total rate of tariff in China for certain products that are subject to additional tariffs announced in April?

A. The total rate of tariff in China for these products is at least 145 percent, including an additional 125 percent tariff.

Q. Are most of Apple’s products currently subject to global reciprocal tariffs?

A. No, the vast majority of Apple’s products are not subject to global reciprocal tariffs that were announced in April, as the Commerce Department has initiated a Section 232 investigation into imports of semiconductors and related products.

Q. What is the purpose of the Commerce Department’s Section 232 investigation into imports of semiconductors?

A. The investigation aims to determine whether imports of semiconductors and related products pose a national security threat, which would affect global reciprocal tariffs.

Q. How will Apple manage its business in response to US tariffs?

A. Cook stated that the company will “manage the company the way we always have, with thoughtful and deliberate decisions.”

Q. Are there any unique factors that benefit the June quarter that should not be used to make projections for future quarters?

A. Yes, Cook clarified that the estimate of $900 million in costs should not be used to make projections for future quarters due to certain unique factors at play in the June quarter.

Q. Will Apple’s production mix change in response to US tariffs?

A. Cook did not confirm whether the company’s production mix will change in response to US tariffs, but stated that he wouldn’t want to predict the mix of production in the future.