Apple CEO Tim Cook addressed investors on the company’s second-quarter earnings call, revealing how the company has managed the impact of the Trump administration’s tariffs. While the tariffs had only a limited impact between January and March, Cook forecasted an additional $900 million in tariff-related costs for the current quarter ending in June. This figure came as a surprise to analysts, who had expected higher costs.
The majority of Apple’s products are currently exempt from Trump’s reciprocal tariffs. Cook acknowledged that predicting the impact beyond June is challenging, as tariff rates and deadlines remain unpredictable. This uncertainty led to a dip in Apple’s shares by up to 4% during extended trading, despite the company exceeding Wall Street expectations for revenue and reporting strong sales growth for iPads and Mac computers.
Apple’s handling of the tariffs underscores the difficulty even a company known for its operational excellence can face when dealing with unpredictable policy shifts. Cook commended Apple’s operations team for their work in optimizing the supply chain and managing inventory effectively to mitigate the tariffs’ effects. The company has been sourcing products for the U.S. from India and Vietnam, which face 10% tariffs, while sourcing computers for global markets from China, where products are subject to a 145% tariff.
Apple had built up inventory ahead of the tariffs, though Cook noted there was no significant evidence of consumers purchasing more products in anticipation. Cook confirmed that most iPhones sold in the U.S. will be sourced from India, while nearly all iPads, Macs, Apple Watches, and AirPods will come from Vietnam. However, Apple will still face the higher 145% tariffs on certain Chinese imports, including AppleCare and accessories.
The uncertainty surrounding tariffs is compounded by the possibility that both Vietnam and India could face new tariffs starting in July. If these tariffs are implemented, it would impact Apple’s strategy of sourcing products from these countries. Additionally, Cook mentioned the potential for further tariffs on semiconductors through a Section 232 Investigation. Despite these challenges, Apple expects its revenue for the current quarter to grow by low to mid-single digits, providing some clarity for investors during this period of uncertainty.
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