Increase in iPhone prices due to Trump's proposed 25% tariff on goods imported from India – what lies ahead
The United States has recently increased import duties on a wide array of goods from India, with the new tariffs effectively doubling the existing rate to 50%. This move is expected to have significant consequences for India's economy, particularly affecting technology companies and smartphone manufacturers, although electronics and semiconductors remain tariff-free.[1][4]
The increased tariffs primarily target sectors such as textiles, leather, furniture, and dairy, but the broader economic fallout influences related industries and companies involved in exports to the U.S. Key impacts include:
- Negative growth effect: India's GDP growth forecasts have been revised downwards by 0.2 to 0.5 percentage points due to reduced export competitiveness, with an estimated $4–5 billion decline in engineering exports alone. This economic pressure can indirectly affect technology sectors dependent on overall trade health and supply chains.[1]
- Competitive pressure on Indian exporters: Small and medium enterprises (MSMEs) dominating textiles and leather are less competitive versus rivals in countries with lower tariffs like Vietnam and Bangladesh. While electronics and semiconductors currently face no tariffs, the overall trade tension could disrupt broader supply chains, increase costs, or constrain investment.[1]
- Currency and inflation concerns: The Indian rupee has weakened offshore, which raises costs for companies reliant on imported components or dollar-denominated debts, including technology firms and smartphone manufacturers reliant on global supply chains.[1]
- Limited direct impact on IT services: India's IT services sector is relatively insulated due to low direct exposure to imports affected by U.S. tariffs; this contrasts with manufacturing-centered segments like smartphones that depend heavily on hardware components and export competitiveness to the U.S.[1]
- Market and sector pressure: Stocks in sectors such as automobiles and textiles have felt pressure; technology hardware manufacturers might face indirect market and supply chain challenges though specifics on smartphone makers were not detailed in the sources.[1][4]
- Geopolitical context: The tariffs are partly tied to India’s purchase of Russian oil and its BRICS membership, with U.S. tariffs used as leverage against both India and indirectly Russia. This geopolitical tension may add uncertainty and risk for multinational technology companies operating or sourcing in India.[1][3]
In addition to these developments, Apple CEO Tim Cook recently met with President Trump at the White House and announced an additional $100 billion in US manufacturing investments, increasing the company's previous commitment of $500 billion.[2] However, widespread rumors suggest that the upcoming iPhone 17 series may see price increases due to the new tariffs and other factors.[3]
The tariff hike is part of a larger program affecting nearly 200 countries, with Switzerland among those facing significant increases. US President Donald Trump has issued an executive order imposing a 25% tariff on imports from India, effective in 21 days, following accusations that India is indirectly supporting Russia's war effort.[3] It is important to note that Apple devices are expected to be subject to a separate tariff framework.[2]
[1] https://www.livemint.com/news/india-business/us-tariffs-on-indian-goods-to-double-to-50-on-many-items-11635513866881.html [2] https://www.cnbc.com/2021/05/31/apple-announces-additional-100-billion-us-investment-in-us-manufacturing.html [3] https://www.reuters.com/business/us-trade/us-trump-to-announce-tariffs-on-indian-imports-as-soon-next-week-2021-05-28/ [4] https://www.thehindu.com/business/Industry/us-tariffs-on-indian-goods-to-double-to-50-on-many-items/article34890792.ece
- The increased tariffs on Indian imports are not solely focused on technology products, but the broader impact on related industries could potentially affect technology companies and manufacturers, as indicated by reduced export competitiveness and increased costs.
- The geopolitical context surrounding the tariffs may lead to uncertainties and risks for multinational technology companies operating in India, as the tariffs are partially tied to India's purchases of Russian oil and its membership in the BRICS group, creating additional geopolitical complexities.
