Tim Cook Explains How Tariffs Are Impacting Apple's Business

Apple CEO Tim Cook today provided some insight into how the tariffs levied by U.S. president Donald Trump have affected its business, and the future impacts that Apple is expecting should tariffs continue.

Cook said that tariffs had a limited impact on the March quarter as Apple was able to optimize its supply chain and inventory. Apple can't entirely estimate the impact of tariffs on the June quarter due to uncertainties, but with no changes, the tariffs will add $900 million to Apple's costs. From Apple's earnings call:Now let me walk you through the impacts of tariffs in the March quarter, and give you some color on what we expect for the June quarter. For the March quarter, we had a limited impact from tariffs as we were able to optimize our supply chain and inventory.

For the June quarter, currently, 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. However, for some color, 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. This estimate should not be used to make projections for future quarters, as there are certain unique factors that benefit the June quarter.

Apple is already sourcing more than half of iPhones sold in the United States from India, while Macs, iPads, AirPods, and the Apple Watch come from Vietnam. For the June quarter, Cook said that Apple expects the majority of iPhones sold in the U.S. to have India as a country of origin, while Apple will continue sourcing other products from Vietnam. Apple will source devices from China for the rest of the world.

Cook said that Apple's operational team has 'done an incredible job around optimizing the supply chain and the inventory,' and that Apple plans to continue to do those things to the degree that it is able to.

The 20 percent tariffs that Trump put in place earlier this year are the tariffs that are primarily impacting Apple, as many Apple products have been exempted from the 125 percent reciprocal tariffs. Some products, though, such as accessories, are subject to the total 145 percent tariffs.

Cook said that he doesn't know what will happen with the Section 232 investigation that will eventually see tariffs applied to semiconductors, a change that will impact Apple.This article, "Tim Cook Explains How Tariffs Are Impacting Apple's Business" first appeared on MacRumors.comDiscuss this article in our forums