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Investing.com-- Apple Inc (NASDAQ:AAPL) expects President Donald Trump’s trade tariffs to add about $900 million in costs in the current quarter, CEO Tim Cook said in an earnings call on Thursday, with the company’s shares falling in aftermarket trade.
Cook also outlined sweeping changes in Apple’s supply chain- most notably a shift in the production of U.S.-sold iPhones to India from China.
Apple’s shares fell 3.8% after the close to $205.10.
The Cupertino, California-based tech giant clocked stronger-than-expected earnings for the March quarter, especially as its iPhone sales improved. But this was offset by the company posting weaker-than-expected revenue from its high-margin services business.
Speaking on an earnings call, CEO Cook flagged a limited impact from Trump’s tariffs during the March quarter.
But Cook said he expects “a majority of iPhones sold in the U.S. will have India as their country of origin,” while noting that Apple’s products were exempt from the worst of Trump’s reciprocal tariffs, at least for now.
Cook said that Vietnam will be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products sold in the U.S., while China will continue to be the country of origin for the vast majority of total sales outside the United States.
“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…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," Cook said.
Trump imposed tariffs of 145% on China in April, although he did grant electronics imports temporary reprieve. But Washington also signaled that Trump will impose separate tariffs on electronics in the coming weeks.
Steep import tariffs on China bode poorly for Apple, given that it manufactures roughly 90% of its products in the country. Reports earlier this year showed the company rushing to ship hundreds of thousands of iPhones from India to the U.S. to avoid Trump’s tariffs on Beijing.