Former President Donald Trump took to his Truth Social platform last Friday to voice his expectations regarding Apple’s manufacturing practices. He stated, “I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America to be manufactured and built in the United States, not in India or anywhere else. If that is not the case, a tariff of at least 25% must be paid by Apple to the US. Thank you for your attention to this matter!” This tweet reignites concerns about a possible trade war as Trump also threatened a 50% tariff increase on imports from the European Union.
Despite these assertions, Indian trade officials indicated that Trump’s comments would not sway ongoing trade negotiations between the US and India. One official, speaking on the condition of anonymity, confirmed, “The tweet does not change our negotiating posture. However, if Apple alters its sourcing and production decisions based on this pressure, it may affect India’s electronics exports.” Another official emphasized that Apple is likely to make decisions based on practical commercial considerations, pointing to India’s cost advantages and expanding domestic market.
Meanwhile, a high-profile Indian trade delegation led by Union Commerce Minister Piyush Goyal remains focused on negotiating the Bilateral Trade Agreement (BTA). They aim to secure a zero-tariff structure for certain US products and advocate for further tariff reductions to ease compliance for US firms in India. The team is expected to return home by Sunday evening.
Industry executives have expressed concerns regarding the timing of Trump’s tweet, particularly as it coincides with important negotiations. One anonymous executive remarked, “When the Indian team is in negotiations with US counterparts, such a statement from the US leadership creates doubt.” Apple, an integral player in India’s production-linked incentive scheme, has played a key role in boosting the nation’s electronics exports, which surged to $14.64 billion in FY25, a significant increase from $5.76 billion in FY23.
In a previous conversation, Trump urged Apple CEO Tim Cook to refrain from manufacturing in India, remarking, “India can take care of itself.” This came just as Apple supplier Foxconn announced a $1.5 billion investment to enhance iPhone production in India, emphasizing the increasing significance of the Indian market in Apple’s global supply chain.
Additionally, a report from the Global Trade Research Institute (GTRI) posits that concerns about India losing capabilities may be overstated. The report highlights that India earns less than $30 per iPhone due to return incentives, and it criticizes the Indian government’s strategy of lowering import duties on smartphone components to protect Apple’s interests, which undermines local businesses.
GTRI co-founder Ajay Srivastava noted, “In order to protect Apple, New Delhi is slashing import duties on crucial smartphone components, a move that undermines Indian companies trying to build a local supply chain.” The report details how the value chain of a $1,000 iPhone contributes significantly to various countries, yet at both the final assembly stages in China and India, manufacturers net only a small portion of the retail price.
If Trump succeeds in moving manufacturing to the US, labor costs could skyrocket from around $230 per month in India to over $2,900, drastically increasing assembly costs for Apple. According to the GTRI findings, assembly costs would leap from $30 to approximately $390 per iPhone, a move that could significantly diminish Apple’s profits unless they adjust prices accordingly.
The implications of these developments resonate across multiple sectors, raising crucial questions about international trade dynamics and the future of global supply chains. As stakeholders navigate this complex landscape, the outcomes of ongoing negotiations will be pivotal in shaping the next chapter of US-India trade relations.
Original Source: https://www.livemint.com/news/india-caught-in-crossfire-trump-demands-apple-shift-manufacturing-to-us-trade-war-bilateral-trade-agreement-iphones-11748008353586.html
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Publish Date: 2025-05-24 05:35:00
