Apple reported better-than-expected first-quarter profits but cautioned investors about the growing impact of US tariffs on its operations. CEO Tim Cook announced that tariffs could cost the company approximately $900 million in the current quarter.
According to Cook, while the impact was initially “limited” at the start of the year, the situation has grown more complex.
“We are not able to precisely estimate the impact of tariffs, as we are uncertain of potential future actions prior to the end of the quarter,” news agency Reuters quoted Tim Cook as saying.
“Assuming the current global tariff rates, policies and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs,” he added.
To navigate these challenges, Apple is significantly shifting its production geography. “We expect a majority of iPhones sold in the US will have India as their country of origin,” Cook revealed, noting that Apple products currently enjoy exemption from Trump’s most severe reciprocal tariffs.
The ongoing trade tensions between the US and China have resulted in substantial tariffs from both sides, though high-end tech goods like smartphones have received temporary relief.
Apple’s strategic response includes diversifying its manufacturing base. While China remains the primary production hub for products sold outside the US, Cook announced that Vietnam would become the primary source for iPads, Macs, Apple Watches, and AirPods destined for the US market.
“What we learned some time ago was that having everything in one location had too much risk with it and so we have, over time with certain parts of the supply chain, opened up new sources of supply,” Cook told analysts, suggesting this diversification strategy would continue.
Despite these challenges, Apple posted strong financial results with revenue of $95.4 billion and profits of $24.8 billion, driven by iPhone sales. However, regional performance varied, with China showing a 3% decline despite local stimulus measures.
