Apple (AAPL) has continued to focus on manufacturing iPhones in India as a way to avoid President Donald Trump’s trade war with China. This saw year-over-year shipments increase 76% in April to roughly 3 million units, while Chinese iPhone shipments dropped about 76%.
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However, the tech giant is unlikely to escape increased tariffs by shifting iPhone production to another country. President Trump has made it clear that he wants Apple to produce iPhones in the U.S., “not India, or anyplace else.”
This puts Apple in a tough spot as it started to transfer a large amount of its iPhone production to India during the COVID-19 lockdowns. That shift reduced its exposure to the increased tariffs on China as India’s tariffs are only 10%. The problem is President Trump has threatened to place a 25% tariff on iPhones if they come from outside the U.S.
Apple Can’t Meet iPhone Demand With India
While Apple has increased its iPhone production in India, it’s not enough to meet U.S. demand. The company needs roughly 20 million units per quarter for U.S. iPhone demand, but India currently only produces less than half of that.
Part of Apple’s problem is resistance from China. The country is hampering plans to move production outside of its borders, making it more difficult for the iPhone maker to transfer materials and talent to India.
Finally, the cost of producing the iPhone in the U.S. would be massive. This prevents Apple from moving iPhone manufacturing to the U.S., leaving it open to tariffs on imported devices. As a result, tariff issues have created a lose-lose situation for Apple’s iPhone production plans.
Is AAPL Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Apple is Moderate Buy, based on 17 Buy, eight Hold, and four Sell ratings over the last three months. With that comes an average AAPL stock price target of $228.22, representing a potential 16.87% upside for the shares.
