• The US last week announced reciprocal tariffs ranging from 10% to 104% on 57 countries.
• China, which accounts for about 80% of iPhone production for the US, now faces a steep 104% tariff following the April 2 announcement, impacting key brands like Apple, Motorola and Google. India accounts for the remaining 20% of supply.
• Vietnam with a 46% US tariff and India with 26% are the most impacted among the countries exporting to the US, affecting key brands like Samsung and Google.
• However, some of the above are better placed to respond to the tariffs. For example, India with a US tariff lower than those for China and Vietnam can offer a good production alternative.
• Apple’s higher margins provide some buffer, but US consumers may still face a significant price increase on new iPhones as tariffs rise.
• OEMs may have already stockpiled smartphone inventory in the US in preparation for the tariffs.
• In the short term, some may focus more on sales outside the US.
• The long-term outlook remains uncertain.

Seoul, Beijing, Buenos Aires, Hong Kong, London, New Delhi, San Diego, Taipei, Tokyo – April 9, 2025

US President Donald Trump announced reciprocal tariffs for a broad list of countries on April 2. As many as 57 countries will be affected by this announcement, including the key manufacturing hubs for smartphone brands dominating the US market, like Apple, Samsung, Motorola, Google and longtail China-based suppliers for low-end US prepaid markets.

Vietnam will face a 46% tariff on its exports to the US, which will hit Samsung since the brand produces more than 60% of its smartphones in the country. Other brands such as Apple, Moto, Google and longtail brands are highly dependent on production in China, which will now be subject to a total US tariff of 104%, a sharp escalation from previous levels and the highest among all affected countries under the new policy. Therefore, all the major brands are at risk of being hit by this tariff increase and are starting to look for solutions to somehow minimize the negative impact.

These new tariffs will directly affect the cost structures of smartphones sold in the US, which could result in higher retail prices and reduced consumer demand. The impact will vary across brands, depending on how many units are produced and in which country. Our initial thoughts are as follows:

What can Apple do?

• Apple has maintained higher margins than other brands, creating flexibility to absorb some of the tariff costs. The company is likely to be the least affected in the short term as it can avoid passing on tariffs to end users if it decides to do so. However, increased inflation and souring consumer sentiment can still lead to weakening demand.

• India faces a tariff of 26%, which is lower than for China and Vietnam. Since India accounted for 20% of the iPhone supply meant for the US in 2024, it could be a big beneficiary of any move to shift iPhone production meant for the US to a relatively cheaper destination.

• However, increasing capacity in India depends on the following factors:

  • Apple’s intent and appetite to diversify swiftly

  • Technological readiness of Indian EMS partners

  • Capex investments and appetite

  • Support from ongoing government schemes

  • India’s prowess at the US’ negotiating table to become a ‘favorable’ production destination

Commenting on this potential scenario, Counterpoint’s Research Vice President Neil Shah said, “India makes the most sense for now, followed by Brazil, though increasing capacity in both will take time. But Apple and everyone else have entered a twilight zone where it is impossible to anticipate tariffs one month or one year down the road, especially now with the China tariff jumping to 104%.”

Shah added, “For Apple and others, there is a list of things that need to fall into place for India to be a better alternative than before – technological readiness of domestic EMS partners, capex appetite, government support and India’s ability to deal with the US at the negotiating table on tariffs. If the country can do these things, it can cement itself as a more favorable production destination.”

How are Samsung and others positioned?

• Even as Samsung is less dependent on China in terms of production, which is mostly for its mid-tier phones with Chinese ODM partners, it is in a strong position to address the concerns related to the new tariffs fairly quickly than others.

Commenting on this potential scenario, Counterpoint’s Research Director Tarun Pathak said, “With significant capacity in India, Samsung can shift production away from Vietnam more quickly than others, helping it offset the impact of the new 46% tariff on Vietnam-made phones. Samsung has two factories in India and one of them has excess capacity which can be scaled up. Further, if the South Korean government successfully negotiates with the US, some exports of premium models from Samsung’s South Korean factories will also see an uplift.”

• Motorola, which too relies heavily on Chinese ODMs and international EMS partners, is also in a relatively better position as it could benefit from shifting more production to Brazil (which has attracted the lowest tariff at 10% and is also one of its biggest markets), and India as well, leveraging Indian EMS partners which are likely to be the key beneficiaries.

Commenting on this potential scenario, Counterpoint’s Research Director Jeff Fieldhack said, “While the imposition of these high tariffs is sudden, OEMs have likely been anticipating it. However, fundamental solutions such as relocating production bases require significant investment and time, and are unlikely to provide relief in the short term, while possible long-term solutions could also face tariffs.”

Fieldhack added, “OEMs which are seeing healthy growth, like Google with its Pixel phones, will likely plan to shift manufacturing to alternative destinations such as India depending on their ODM/EMS partners’ capabilities and capacities. Brands that have been manufacturing for US carriers and prepaid markets will be affected the most due to their strong dependence on the Chinese ecosystem, which opens up new opportunities for existing brands to expand and newer brands to enter.”

Read more:

• Shipments of ‘Made in India’ Smartphones Grew 6% YoY in 2024 Amid Record Exports
• India Handset Shipments by Manufacturer, Q4 2024

Related Notes:

• Automakers Swerve To Minimize Impact Of US Tariffs

• Counterpoint First Take: Impact of Trump Tariffs on Global Trade, Tech Industry

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