TLDR
- AAPL closed at $205.35 on May 2, down 3.74%
- Apple expects $900 million tariff cost this quarter
- Shifting the majority of the US iPhone supply to India
- China’s revenue fell 3%, raising regional concerns
- Stock down 17.9% YTD but up 19.2% over the past year
Apple Inc. (NASDAQ: AAPL) shares closed at $205.35 on May 2, dropping 3.74% after the company warned about a $900 million hit from US tariffs.
CEO Tim Cook confirmed that Apple will shift the bulk of its US iPhone supply chain to India to reduce exposure to trade disruptions. While Apple beat first-quarter profit estimates, fresh tariffs, weakening China sales, and rising supply costs have sparked investor worries.
Tariffs to Cost Apple $900 Million
Cook said tariffs would add $900 million in costs this quarter, even though earlier impacts were limited. Ongoing tit-for-tat US-China tariffs have disrupted global tech supply chains. Apple’s finished iPhones are temporarily exempt, but many components are not, leading to rising production costs.
apple’s tim cook: at current tariff levels, “we estimate the impact to add $900m to our costs” in june quarter pic.twitter.com/BUxhjtoiF0
— ian bremmer (@ianbremmer) May 2, 2025
Independent tech analyst Rob Enderle warned that crossing multiple borders inflates costs, saying, “This all adds up to an expensive mess.” Canalys’ Le Xuan Chiew added that Apple built inventory ahead of tariffs but will need to expand India production to mitigate future risks.
Apple Shifts iPhone Supply Chain to India
Cook revealed that most iPhones sold in the US will soon originate from India. Meanwhile, Vietnam will produce nearly all iPads, Macs, Apple Watches, and AirPods shipped to US consumers. China will continue making devices sold in other global markets.
The shift comes as Apple diversifies away from reliance on China, where US-China trade tensions and local competition have weighed on sales. Cook said spreading production reduces risk, hinting that more diversification is likely in the future.
Sales in China Slide, Stock Under Pressure
Apple reported revenue of $95.4 billion last quarter, with $24.8 billion in profit. Sales grew in the Americas and Japan but slipped 3% in China despite government subsidies aimed at boosting demand.
Analysts flagged Cook’s complex supply chain overhaul as the “real story” going forward. Emarketer’s Jacob Bourne warned that costs from these moves could pressure margins and potentially be passed on to consumers.
Apple shares are down 17.9% year-to-date but remain up 19.2% over the past year. Over five years, AAPL has returned nearly 193%, well ahead of the broader market. With fresh tariff challenges and supply chain shifts underway, the coming quarters will test Apple’s ability to maintain profit margins while navigating geopolitical risks.
