Tim Cook is preparing for the worst, as Trump's tariffs could come back to hit Apple.

The iPhone maker's chief warned that the company could take a hit of up to $900 million in additional costs this quarter alone from planned U.S. tariffs on foreign imports.

"We estimate the impact will add $900 million to our costs," Cook said during an earnings call.

The planned U.S. tariffs on foreign imports come at an uncertain time for Apple, which is already facing declining sales in China and new legal hurdles in the country.

However, Cook clarified that the estimate reflects current conditions and should not be used to forecast future quarters.

"There are some unique factors that benefit the June quarter," he added.

Sales in China are falling

Cook had previously managed to secure an exemption from Trump's tariffs, set at a whopping 145%, on smartphones and other electronic devices, according to The New York Times.

But that relief may not last long. The Trump administration has since approved new tariffs on semiconductor chips, a move that could raise the cost of iPhones, Macs, iPads and other Apple devices.

Earlier, the Cupertino-based company reported revenue of $95.36 billion for the March quarter, up 5% year-over-year. Net income rose to $24.8 billion, or $1.65 per share, topping Wall Street expectations of $1.63 per share on revenue of $94.68 billion.

Apple's Services segment—which includes the App Store, Apple TV+, Apple Music, Apple Pay and iCloud—also posted a record quarterly revenue of $26.65 billion, up 11.8% from a year earlier. However, the figure was slightly below analysts' estimates of $26.70 billion, according to StreetAccount.

However, the company's performance in China told a different story. Sales in the region fell 2.3% to $16 billion in the fiscal second quarter that ended March 29, falling short of the average estimate of $16.83 billion.

The decline highlights Apple's growing challenges in one of its most important markets, amid weakening demand and intensifying local competition.

The diversification strategy is gaining momentum

Meanwhile, Apple's CEO said he expects the majority of iPhones sold in the US to be manufactured in India, while iPads, Macs and most other products will come from Vietnam in the current quarter.

However, outside the US, China will remain the main manufacturing hub for Apple products.

Predicting what Trump's proposed tariffs might mean beyond June is "very difficult," Cook said, "because I'm not sure what's going to happen with the tariffs."

Apple finds itself at the epicenter of intensifying US-China trade tensions, with the Trump administration's renewed tariffs posing significant threats to its operations.

Historically dependent on China for manufacturing, Apple is now accelerating its diversification strategy.

According to a Reuters report, plans are underway to shift all iPhone production for the US market to India by the end of 2026, a significant shift from the current 10% production share. The move is intended to reduce exposure to Chinese tariffs and geopolitical uncertainties.

Compounding these challenges, Apple is facing legal hurdles. A federal judge recently ruled that the company violated a 2021 court order regarding its App Store policies, potentially opening the door for Epic Games’ “Fortnite” to return to the App Store and challenging Apple’s control over in-app payments.

 

(AA/BalkanWeb)