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A Strategic Move to Dodge Additional Costs
Following the announcement of new US tariffs on imports from China and India, Apple has been exploring ways to minimize financial losses. An option under consideration: boosting iPhone production in Brazil. According to Brazilian magazine Exame, the company is assessing the possibility of expanding its capabilities at the Foxconn facility in Jundiaí, in the State of Sao Paulo. The goal is to avoid the high import duties by exporting some locally assembled iPhones to the United States.
iPhone 16 Pro May Soon Be Included
As a reminder, Apple has already been manufacturing certain iPhone models in Brazil since 2011, particularly lower-end versions for the local market. However, production volumes have been relatively modest up until now. Exame reports that updates to production lines and equipment were initiated in 2024 to prepare for an expansion of operations on site.
The Brazilian National Telecommunications Agency (Anatel) has recently approved the assembly of the iPhone 16 model in Brazil. iPhones 13, 14, and 15 are already being produced there. The novelty is that Apple is now also targeting the Pro models, which would be a first for Brazil. This would serve both local demand and start exporting certain models to other markets, particularly the United States.
The benefit of this partial relocation is clear: products imported from Brazil would face a 10% tax versus 34% from China and 26% from India. This difference is becoming significantly impactful.
Economic Context Necessitates Movement
The announcement of new tariffs by President Trump struck the markets like a sledgehammer. Apple’s stock fell more than 10% in a few days, wiping out $300 billion in market value. Other giants like Nvidia and Tesla were also affected. Nintendo, for its part, decided to delay US orders of its Switch 2.
Apple had already diversified part of its production to Southeast Asia, particularly in India and Vietnam. However, with the new tariffs imposed on these countries, Brazil has become a temporarily more favorable alternative. It remains to be seen whether this strategy will be enough to cushion the economic blow, and especially if Trump will decide to impose higher tariffs on imports from Brazil, in a cat-and-mouse game with Apple.