In a significant boost to India's burgeoning smartphone industry, the United States has decided to exempt electronic items, including smartphones, computer monitors, and other gadgets, from the reciprocal tariffs previously announced by the Trump administration.
The US Customs and Border Protection issued a notice on Friday stating that these electronic goods would be excluded from the tariffs, which included a 26% levy on India and a substantial 145% tariff on China.
Experts suggest that this decision stems from concerns about the potential impact on iPhone prices in the US. With Apple manufacturing approximately 80% of its devices in China and a significant portion of the remaining 20% in countries like India, Vietnam, and Brazil, the tariffs would have led to a tripling of iPhone costs for American consumers. Notably, Counterpoint Research indicates that Apple held over half of the US smartphone market share last year. Reports also suggest that Apple airlifted around 1.5 million devices from India prior to the tariff announcement.
This move provides considerable relief to India, as smartphones emerged as the country's top export commodity in the last financial year. India's mobile phone exports reached a record high of Rs. 2,00,000 crore in FY 2024–25, demonstrating a remarkable 55% growth compared to the Rs. 1,29,000 crore recorded in FY 2023–24.
The India Cellular and Electronics Association (ICEA) attributes this export surge to the increased manufacturing operations of major players like Apple and Samsung in India. Consequently, India's total mobile phone production is estimated to have reached Rs. 5,25,000 crore in FY25, up from Rs. 4,22,000 crore in the previous fiscal year.
Indian industry experts have welcomed the US decision, deeming it a logical step given that electronic items constitute a significant portion of US imports. Faisal Kawoosa, founder of Techarc, stated that a rapid shift of the entire value chain to meet the new tariff requirements was impractical, adding, "This outcome was largely what I had anticipated. I had mentioned earlier that an exclusion list or exemption list would be necessary, given the impracticality of quickly shifting the entire value chain to meet the new requirements. I foresaw this development."
Prabhu Ram, Vice President of the Industry Intelligence Group at CyberMedia Research (CMR), described the US tariff exclusions as "a timely and meaningful move toward cooling trade tensions and bringing relief across the global tech ecosystem." He believes the exemptions will provide a strong boost to major tech companies, including Apple, Samsung, Lenovo, Dell, AMD, Nvidia, and the broader semiconductor and hardware industry.
Tarun Pathak, Research Director at Counterpoint Research, emphasized that electronics are a major import category for the US, and higher prices would have directly negatively impacted American households. He also suggested that these exemptions indicate early behind-the-scenes efforts to oppose the widely criticized tariffs.
The tariffs in question were initially announced with an effective date of April 9, 2024. However, a swift reversal followed, with an announcement of a 90-day pause for countries affected by the higher US tariffs, with the exception of China, for which the tariffs were raised to 145%.