Apple’s India Manufacturing May Push iPhone 17 Prices Higher

Apple’s long-term strategy to shift iPhone manufacturing out of China and into India could now face a costly setback. A steep new U.S. tariff on Indian imports, set to take effect August 1, threatens to undercut Apple’s efforts just as iPhone 17 production ramps up.

25% Tariff Could Directly Impact U.S. iPhone 17 Pricing

iPhones assembled in India have so far been subject to a 10% import tariff when shipped to the U.S., already more than triple the 3% Apple paid before the U.S.-China trade war reshaped global supply chains. But barring a last-minute deal between Washington and New Delhi, that rate is poised to spike to 25%.

The tariff escalation stems from policies originally initiated during former President Trump’s administration. Trump, who remains vocal about trade terms, recently stated there’s still no agreement in place and criticized India for what he called some of the world’s highest tariff barriers.

The timing is especially problematic. Apple has spent years building out Indian production lines, and the country now accounts for roughly one-fifth of global iPhone shipments. A significant portion of those units are destined for U.S. consumers. Analysts estimate up to $40 billion worth of iPhones could be affected by the new 25% rate.

Production Constraints Leave Apple With Few Options

There’s little Apple can do in the short term to shift production elsewhere. The idea of quickly rerouting U.S.-bound iPhone manufacturing is more complicated than it sounds. American assembly is logistically and economically unfeasible, and despite recent investments in stateside facilities, the broader component supply chain remains deeply rooted in Asia.

Switching back to China isn’t viable either. iPhones shipped to the U.S. from Chinese factories would face even steeper tariffs of around 55% in some cases. That made India the preferred workaround. But with the new rate on the table, Apple’s backup plan is looking far less stable.

Tariffs Threaten to Squeeze Margins or Hike Prices

The new tariff could arrive just as iPhone 17 units begin shipping for the U.S. market. Production for the launch is already underway, and any devices arriving stateside after August 1 would be subject to the increased duty unless a bilateral agreement is reached in time.

That leaves Apple with an uncomfortable decision: absorb the added cost or pass it on to consumers. Neither route is painless. Apple’s profit margins have already been hit by rising component prices and currency pressures. Raising sticker prices on the iPhone 17 lineup could alienate upgrade-hesitant buyers, especially with inflation-weary consumers already feeling the pinch.

Talks between the U.S. and Indian governments are expected to resume in mid-August, with a possible agreement emerging by September or later. But for Apple, that may come too late. The initial wave of iPhone 17 shipments will likely bear the brunt of the new import cost.

Related: iPhone 17 Price Hike Could Make All Models $50 More Expensive

Diversification Could Accelerate After iPhone 17 Launch

In the near term, Apple will likely maintain its course in India, there’s no near-term alternative that can match its scale. But this episode underscores the vulnerability of relying on a single fallback to China. It may accelerate Apple’s diversification efforts, with Vietnam, Brazil, and other Southeast Asian countries becoming stronger candidates for future assembly growth.

For U.S. buyers, the most immediate impact could be felt at checkout. A $100 price increase across the iPhone 17 lineup, while speculative, isn’t out of the question given the math on a 25% tariff hike. That kind of jump could hit entry-level buyers hardest and complicate Apple’s premium-tier upgrade strategy.

Apple’s customer base remains loyal, but pricing is never immune to pushback, especially when driven by geopolitical forces rather than product innovation.

Would a price hike stop you from upgrading this year? Tell us what you think in the comments.