Shifting final assembly of Apple products like iPhone from China to India has helped Apple avoid costly tariffs in the United States. But what happens when the US imposes similar tariffs in India to those seen in China?

While the risk is present, analyst Gene Munster doesn’t see it as catastrophic for the cost of the iPhone. Munster set the stage this week for the situation as it develops:

This morning on Squawk Box, President Trump suggested tariffs on India may be going up soon. He commented that “We settled on 25%, but I think I’m gonna raise that very substantially over the next 24 hours” if India does not reduce the oil that it is buying from Russia. Caught in the crossfire is Apple, which over the past two years has moved iPhone manufacturing that supplies the US from China to India in an effort to reduce the impact of tariffs.

As an exercise, Munster considered what even a 50% tariff rate would do to Apple if implemented by the Trump administration:

As for a sensitivity, if the India tariff were to jump to 50%, that would increase the tariff-related costs to around $2.5B per quarter (for all three months). If you annualize that, it comes to $10B in tariff-related costs, or about an 7% impact to operating income. The incremental part of that is an additional 4% hit to operating income.

For Apple, even a single digit hit to operating income is an unfathomable amount of money at scale. However, Munster expects Apple to have some protection against the worst case scenario when it comes to tariffs on exports from India:

Still, Apple’s importance complicates matters. As a symbol of U.S. innovation and global tech leadership, Apple plays a role in how American competitiveness is perceived abroad. Even as Trump threatens tariffs, I believe the likelihood of Apple facing full exposure remains low. History suggests that exemptions or behind-the-scenes arrangements are likely, especially given the political and economic optics of harming a flagship U.S. brand.

Separately, the White House is already signaling today that Apple is readying another U.S. investment announcement. These sorts of press releases have been viewed favorably by the Trump administration thus far, even if the news ends up being a repackaging of efforts already underway.

Meanwhile, Apple is expected to raise the base price for several iPhone 17 models when the new lineup is unveiled next month.