Apple Projects $1.1 Billion in Tariff Expenses for Next Quarter

Apple is projecting that tariffs will cost the company $1.1 billion in the upcoming July-to-September quarter, a rise from the previous period, as stated by CEO Tim Cook during Thursday’s earnings call with investors.

These cost estimates, based on current rates and policies, could be lower than expected, much like in the prior quarter. For the June quarter, Apple incurred approximately $800 million in tariff-related costs, which was below the $900 million forecast issued in May.

Cook noted that most tariffs affecting Apple arise from the International Emergency Economic Powers Act (IEEPA). Earlier in the year, amid rising trade tensions, the U.S. and China agreed to a 30% tariff on imports from China. This trading deal reduced “reciprocal” tariffs from 125% to 10%, along with a 20% duty on China pertaining to fentanyl, and is set to remain in effect until August 12.

While the increase in sales suggests that tariff concerns may have spurred sales, Cook downplayed the idea of a “pull forward” effect, insisting that customers are more influenced by the “strength of the product.”

“Looking at the iPhone, the 16 family saw double-digit growth compared to the 15 family in the same quarter last year,” Cook remarked during the call. “We achieved a new upgrade record, which I believe is directly related to the strength of the product.”

iPhone sales grew by 13% year-over-year, yielding $44.5 billion in revenue—nearly half of the company’s total revenue for the quarter, which was $94 billion.

However, tariffs have made an impact and may continue to do so, even as Apple seeks to shift its manufacturing operations to countries with lower tariffs.

Apple’s devices are mainly produced in India, China, and Vietnam. Nearly 50% of the iPhones sold in the U.S. are manufactured in India, while Macs, iPads, and watches intended for U.S. customers are produced in Vietnam. Each of these nations faces tariffs of 25% and 20%, respectively.

President Trump has previously expressed his dissatisfaction regarding Apple’s increasing focus on India for its supply chain, warning the company of a 25% tariff unless it moved iPhone production back to the U.S.

During the investors’ call on Thursday, Cook reaffirmed Apple’s commitment to the U.S., announcing that the company intends to invest $500 billion in the country over the next four years, primarily targeting chip and semiconductor manufacturing across the nation.