Why Trump's tariffs on India's electronics exports have been delayed
What's the story
India's electronics sector, including Apple's suppliers, has been given a two-week respite from the proposed 25% tariffs by the US. The Section 232 tariffs, which cover electronic products like smartphones and laptops, are still under review amid ongoing bilateral negotiations. This development comes after US President Donald Trump announced a sweeping duty on all Indian goods starting tomorrow.
Tariff implications
Exemption still stands for now
The Section 232 tariffs had previously exempted smartphones, laptops, and semiconductors from a 10% baseline tariff imposed in April. "That exemption still stands for now, and discussions are ongoing," a government official said to Moneycontrol. The official clarified that until the Section 232 tariffs are officially announced, the exports of smartphones from brands such as Apple, Samsung, and Motorola to the US won't be affected.
Tariff uncertainty
Officials working to shield electronics exports
It remains unclear if the proposed 25% duty shall be levied on top of an existing 10% tariff. Nevertheless, officials are working to shield electronics exports, particularly the high-value items like smartphones and laptops, from its full impact. "The review is ongoing and is expected to be concluded within two weeks," a second official said, adding that the industry is hopeful that smartphones and laptops will remain exempt.
Export challenges
Trump's decision threatens India's iPhone export plans
Trump's decision directly threatens India's plans to become a major global hub for iPhone exports. Apple, which has quickly increased local production through contract partners Foxconn and Tata Electronics, exported more than $5 billion worth of iPhones from India in the April-June quarter. This accounted for nearly 70% of the country's smartphone exports during that period.
Production goals
Apple's ambition for India
Apple planned to produce 60 million iPhones in India by 2025, up from 35-40 million units projected for 2024-25 period. During the Q2 earnings call, CEO Tim Cook confirmed that all iPhones sold in the US during the June quarter were assembled in India. However, analyst Neil Shah of Counterpoint Research warned that "Apple's ambitions to turn India into a major iPhone export hub for the US could face a serious challenge due to tariffs if there is no exemption."