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Apple CEO Tim Cook said Thursday that the majority of iPhones sold in the U.S. in the current fiscal quarter will be sourced from India, while iPads and other devices will come from Vietnam as the company works to avoid the impact of President Trump's tariffs on its business.
Apple's earnings for the first three months of the year topped Wall Street's expectations thanks to high demand for its iPhones, and the company said tariffs had a limited effect on the fiscal second quarter's results.
Cook added that for the current quarter, assuming things don't change, Apple expects to see $900 million added to its costs as a result of the tariffs, but Cook said the company remains “confident” in this business.
The Cupertino, California-based company earned $24.78 billion, or $1.65 per share, in the first three months of the year, up 4.8% from $23.64 billion, or $1.53 per share, in the same period a year earlier.
Revenue rose 5.1% to $95.36 billion from $90.75 billion.
Analysts, on average, were expecting earnings of $1.62 per share on revenue of $94.19 billion, according to a poll by FactSet.
The numbers for the January-March period provide a snapshot of how Apple was faring before President Trump's unveiling of sweeping tariffs in April that rattled the financial markets amid fears a trade war would reignite inflation and shove the U.S. economy into a recession.
“While it is likely that some of the sales growth was driven by consumers accelerating purchases ahead of expected tariff increases, margins remained healthy on the other side of the balance sheet,” said Thomas Monteiro, an analyst at Investing.com. He added that the company “still has room for maneuver” regardless of the economic backdrop and will “likely not need to significantly deplete cash reserves to keep moving the needle.”
Apple’s reliance on Chinese factories to make its iPhones and other devices thrust the technology trendsetter into the crosshairs of Trump’s trade war. The exposure caused Apple’s stock price to plunge 23% shortly after the president announced the severity of the reciprocal tariffs, temporarily erasing $773 billion in shareholder wealth in the process.
Most of those losses have since been recovered after Trump temporarily exempted iPhones and other electronics from the reciprocal tariffs, but Apple’s stock remains down by nearly 5% since the April fusillade of tariffs.
Besides the trade war, Apple has been hurt by its inability to live up to its own hype surrounding artificial intelligence features on the iPhone 16 lineup that came out last fall.