US Tariff Threat Puts India-Made iPhones and Auto Exports at Risk

New Delhi, 24th February 2025: Apple and India’s auto component manufacturers could face significant challenges if the US government imposes reciprocal tariffs on electronics and automotive imports from India. This move, under consideration by the Trump administration, threatens to disrupt Apple’s expanding manufacturing operations in India and impact the lucrative auto component trade between the two nations.

Industry insiders warn that imposing tariffs could hinder Apple’s production strategy, which has increasingly relied on India as a manufacturing hub for iPhones. “Apple has become one of India’s largest exporters of electronic goods, with shipments primarily directed to China and the US,” an industry executive familiar with the company’s operations said. Reports suggest that Apple’s exports to the US alone could reach nearly $8-9 billion this fiscal year.

Currently, Apple benefits from zero import duties when shipping India-made iPhones to the US, making India a profitable manufacturing base. However, concerns arise over India’s 16.5% import duty on smartphones and electronics. “If the US decides to impose a similar 16.5% tariff on Indian-made electronics, it could completely alter the cost-benefit equation for manufacturers,” said a senior vendor in the electronics industry.

Adding to the uncertainty is the recent US decision to impose a 10% tariff on Chinese electronics imports. While this initially favored Indian manufacturers, the potential inclusion of India under a similar or higher tariff regime could make Indian exports less competitive. “If duties on Indian smartphones and electronics rise to 16.5%, manufacturing in India may become costlier than in China. Apple could then find it more economical to source from China, even at a 10% duty,” another vendor explained.

This concern isn’t limited to Apple. Other smartphone manufacturers like Samsung and Motorola, which also export devices from India to the US, could see their business models disrupted. “The entire premise of exporting smartphones to the US will be thrown into uncertainty,” a vendor stated.

The auto component industry faces a similar dilemma. Indian manufacturers currently export parts worth approximately $7 billion to the US, while American imports into India amount to just $1.4 billion. Industry experts fear that higher US tariffs could put Indian suppliers at a disadvantage. “Currently, India imposes import duties between 7.5% and 15% on American auto parts, while Indian components entering the US are charged just 1-2% duty, with some even enjoying zero tariffs,” an auto component manufacturer said.

Despite these concerns, Indian auto component suppliers believe their overall exposure to US trade remains limited. “Indian auto parts make up only $7 billion of the US’s total $300-billion component imports, so our share is relatively small,” an industry executive noted.

While India’s growing role in global manufacturing has been a key driver for companies like Apple, policy shifts in the US could reshape trade dynamics and force manufacturers to reassess their supply chain strategies.