Though Apple has been working to diversify its provide chain over the previous few years, it stays closely depending on China. That’s inflicting stress as the corporate as soon as once more turns into a pawn in a US-China commerce struggle.
Whereas some iPhone manufacturing has been shifted to India and Vietnam, it hasn’t been almost sufficient. It additionally doesn’t assist that China is understandably resisting Apple’s makes an attempt to shift manufacturing elsewhere.
However, Apple has one other nation in its provide chain that might grow to be a hidden gem amidst the present financial uncertainty: Brazil.
Earlier this week, Apple gained a reprieve from the total power of the punishing 145% tariffs which have been levied in opposition to China. Nonetheless, that received’t doubtless final lengthy because the Trump Administration is set that there shall be no exemptions from China’s “unfair commerce practices.” It’s vowed to position new tariffs on semiconductors and different electronics. These might not be as excessive, however they’re nonetheless doubtless going to exceed what the US is charging its different buying and selling companions.
Till Trump relented final week, imports from India and Vietnam confronted 26% tariffs. China’s unique tariffs have been 54%, however the Trump administration elevated these to 104% after which 145% after Beijing retaliated with its personal tariffs on US items going to China. These 145% tariffs nonetheless apply, and the US has threatened to lift them to 245% if China continues to escalate.
In the meantime, Brazil has confronted solely a ten% “baseline” tariff — the one which applies to just about each nation on this planet. Different “retaliatory” tariffs have been added on high of that, however Brazil didn’t have sufficient of a commerce deficit with the US to be a goal for this retaliation.
Apple has been assembling a comparatively small variety of standard-model iPhones in Brazil for a number of years at a Foxconn facility in Jundiaí, São Paulo. These are largely to supply extra reasonably priced choices for the native market, as Brazil has comparatively excessive import duties on electronics. These made it extra economical for Apple to arrange manufacturing for the iPhone 13, iPhone 14, iPhone 15, and iPhone 16 in that nation to supply these fashions at a extra aggressive value. The “Professional” fashions have nonetheless at all times been imported from China.
Nonetheless, in mild of steep tariffs on different international locations, Brazilian information businesses have reported that Apple is trying to ramp up manufacturing in Brazil to make use of as a launching pad into the US iPhone market.
In a stunning twist, Apple might have already taken step one on this path. Brazil’s MacMagazine reported this week that the iPhone 16e has been produced at Foxconn’s Jundiaí plant from the very begin. That’s a shift from prior fashions, the place Brazilian manufacturing didn’t start till a number of months after the preliminary launch.
Prospects who’ve bought the iPhone 16e in Brazil have observed that it’s labeled “Assembled in Brazil – Brazilian Trade” as a substitute of labels for China or India. The half numbers additionally present BR/A, typical for Brazilian-made iPhones, versus BE/A for iPhones imported from different international locations (which different members of the iPhone 16 lineup nonetheless present)
As famous by 9to5Mac, which first shared the report, the official value of an iPhone 16e in Brazil is round $890 USD, however many retailers are promoting it for as little as $670, a cheaper price that’s doubtless the results of regionally produced fashions being exempted from tariffs.
Alongside the identical strains, an iPhone 16e imported into the US from Brazil would solely be subjected to 10% tariffs, which is half of what Apple is paying to deliver iPhones in from China, the place they’re nonetheless topic to a base 20% tariff even after the Trump administration’s reversal of the upper 145% levy. For now, tariffs on Vietnam and India are additionally again down from 26% to 10%, however that might simply change once more by the point the iPhone 17 lineup is launched. The tariffs on US imports from Brazil have been a flat 10% because the new commerce insurance policies got here into impact.