Tariffs are projected to cost Apple $1.1 billion in the July-to-September quarter, an increase from the previous period, CEO Tim Cook announced during the company’s earnings call with investors on Thursday. These cost projections, based on current rates and policies, could end up lower than expected, as they did in the previous quarter. Apple incurred around $800 million in tariff-related costs for the June quarter, below the $900 million estimate shared in May.
Cook explained that most of the tariffs affecting Apple stem from the International Emergency Economic Powers Act (IEEPA). Earlier this year, amid rising trade tensions, the U.S. and China agreed to a 30% tariff on imports from China. This agreement, which reduced reciprocal tariffs from 125% to 10% plus a 20% duty related to fentanyl, remains in effect until August 12.
While sales growth suggests that concerns over tariffs may have driven some purchases, Cook downplayed this effect, attributing consumer demand to the strength of Apple’s products. He noted that the iPhone 16 family saw double-digit growth compared to the iPhone 15 family in the same quarter last year, setting an upgrade record. iPhone sales rose 13% year-over-year, generating $44.5 billion in revenue—nearly half of Apple’s total quarterly revenue of $94 billion.
Despite strong sales, tariffs continue to impact Apple, even as the company shifts manufacturing to countries with lower tariffs. Apple devices are primarily produced in India, China, and Vietnam. Nearly half of the iPhones sold in the U.S. are made in India, while Macs, iPads, and watches for U.S. customers are manufactured in Vietnam. Both India and Vietnam face tariffs of 25% and 20%, respectively.
Former President Trump previously criticized Apple for moving its supply chain focus toward India, threatening a 25% tariff unless iPhone production shifted to the U.S. Cook reaffirmed Apple’s commitment to the U.S. during the earnings call, stating that the company has pledged $500 billion in investments over the next four years to build chips and semiconductors domestically.