Apple dodges crisis as Trump delays tariffs

US President Donald Trump stated that he would continue to impose tariffs on phones, computers, and popular consumer electronics products, considering the weekend’s exemption a procedural step in his broader effort to reshape US trade.

The delay, announced late Friday and exempting a range of popular electronic products from the 125% tariff applied to China and the 10% fixed rate applied worldwide, is temporary and part of a long-standing plan to apply a different and specific tax to the sector.

Shortly after finishing a round of golf on Sunday, Trump posted on social media, “NOBODY is getting ‘off the hook.’”

According to Trump, the exempted products are “just being moved into a different Tariff ‘bucket,’” and the administration will take “a look” at semiconductors and the entire electronic supply chain.

Speaking to reporters on Air Force One, Trump said that decisions would be made soon, with details on the tariff rate for semiconductors to be announced within the next week.

However, Trump also signaled that he is open to discussions with companies regarding the scope of the sectoral tariff on semiconductors and products based on them, such as iPhones and tablets.

“We’re going to discuss it, but we’re also going to talk to the companies. You have to have a certain flexibility. Nobody should be so rigid,” Trump said.

Friday’s pause appears to be a temporary victory for Apple and other manufacturers, particularly those relying on Chinese production.

According to a report in Bloomberg, Apple has managed to avert its biggest crisis since the pandemic, at least for now.

Trump’s 125% tariffs on goods manufactured in China threatened to disrupt the supply chain as severely as the Covid-19 pandemic did five years ago.

By exempting many popular consumer electronics on Friday night, the US President handed Apple a major win. These products include iPhones, iPads, Macs, Apple Watches, and AirTags.

A new and lower sectoral tariff may also be applied to goods containing semiconductors, but a 20% tariff is still applied to electronic products shipped from China.

Until Trump reinstates tariffs on electronic products, the surprise exemption is a win for Apple and the consumer electronics industry, which still largely depends on China for production.

Before the latest exemption, the iPhone maker had a plan: adjusting its supply chain to produce more US-bound iPhones in India, where they would be subject to much lower taxes.

Apple executives believed this would be a short-term solution to avoid Chinese tariffs and prevent high price increases.

Given that iPhone facilities in India are producing at a rate of more than 30 million iPhones per year, production in this country alone could meet a significant portion of American demand. Apple sells approximately 220 million to 230 million iPhones annually these days, with about one-third going to the US.

Implementing such a change smoothly would have been difficult, especially as the company is already approaching production of the iPhone 17, which is primarily to be manufactured in China. Fears had grown in Apple’s operations, finance, and marketing departments about the impact on the new phones’ launch in the fall.

According to Bloomberg, the company would have to accomplish the daunting task of moving more iPhone 17 production to India or elsewhere in just a few months.

In this case, it would probably have to raise prices (which is still possible) and fight with suppliers for better profit margins.

Another concern for Apple was: How would China retaliate if the company increased its production outside of China even faster?

Apple derives approximately 17% of its revenue from this country and operates dozens of stores, making it an outlier among US-based companies.

According to Morgan Stanley estimates, the iPhone is Apple’s biggest money-maker, and approximately 87% of these products are manufactured in China. About four out of every five iPads and 60% of Macs are also produced in this country.

Together, these products account for approximately 75% of Apple’s annual revenue. Yet, the company now produces almost all of its Apple Watches and AirPods in Vietnam. Some iPads and Macs are also produced in this country, and Mac production is expanding in Malaysia and Thailand.

According to Morgan Stanley estimates, the company makes approximately 38% of its iPad sales and about half of its Mac, Apple Watch, and AirPods revenue in the US.

It is unlikely that Apple will completely decouple from China, which has been its manufacturing hub for decades. Even if Trump forced Apple to manufacture iPhones in the US, the lack of domestic engineering and manufacturing capabilities could make this nearly impossible in the short term.

On the other hand, according to US Commerce Secretary Howard Lutnick, smartphones and other electronic devices that won exemptions will be part of the new tax applied to semiconductors.

Speaking on ABC’s “This Week” on Sunday, Lutnick signaled that the tariff delay was temporary and reiterated Trump’s long-standing plan to apply a different, specific tax to the sector.

Since the announcement of the tariff wave on April 2, Apple and other tech companies’ lobbyists have been pressing the White House for exemptions.

But discussions have become more urgent in recent days after a series of retaliations between Washington and Beijing led to a 145% tax on imports from China.

The potential impact has become even more acute after Trump halted higher tariffs on other countries. This meant an advantage for Apple’s competitor, Samsung Electronics, which produces its phones outside of China.

Apple and other companies have emphasized to the Trump administration that while they are willing to increase their investments in the US, there is little benefit to moving final assembly to this country.

Instead, they argue that the US should focus on bringing back higher-value jobs and encouraging investment in areas such as semiconductor manufacturing.