Tariffs and Tech: New Challenges for Apple’s Manufacturing Operations in Vietnam

In early April 2025, the United States announced a 46% tariff on Vietnamese exports as part of a broader trade policy shift aimed at addressing trade imbalances and foreign market practices. The announcement raised immediate concerns for Vietnam’s export-driven economy and companies like Apple, which rely heavily on the country as a manufacturing base. However, shortly after the announcement, the United States government issued a 90-day delay on the implementation of the 46% tariff, reducing it temporarily to a flat 10% across all affected imports from Vietnam. With a substantial tariff now potentially targeting Vietnamese exports to the United States, Apple will face challenging decisions to reassess its production allocation, pricing strategy, and long-term manufacturing investments in the country.

In recent years, Apple has deliberately expanded its manufacturing footprint beyond China to reduce supply chain risks. This diversification strategy gained momentum following the initial Trump-era tariffs, COVID-19 disruptions, and chip shortages that exposed vulnerabilities in Apple's China-centric production model. Vietnam has since emerged as a key alternative manufacturing hub for several Apple products, including iPads (20% of production), AirPods and Apple Watches (90% of Apple’s wearable product assembly), and some Mac computers.

The United States remains Apple’s largest and most profitable market, accounting for over 30% of its global revenue. A substantial portion of the products manufactured and assembled in Vietnam—particularly high-demand items like AirPods, iPads, and Apple Watches—are destined for consumers in the United States. As a result, the proposed 46% tariff on Vietnamese exports poses a significant threat to Apple’s cost structure, pricing strategy, and supply chain logistics for the United States market. While the tariff has been temporarily delayed for 90 days, allowing for further negotiations, its potential implementation could disrupt Apple’s operations and profitability in one of its most critical markets.

The introduction of import tariffs on Vietnamese exports has introduced significant friction into Apple’s manufacturing ecosystem. Vietnam, once viewed as a strategic hub for the cost-effective assembly of key Apple products, could now possibly face fresh headwinds that would challenge its role in Apple’s global supply chain.

• Planned Capacity Expansion in Vietnam at Risk: Apple’s ambitious production expansion in Vietnam will face renewed uncertainty due to the shifting tariff landscape. In recent years, Apple has significantly scaled up manufacturing in the country, with key suppliers investing heavily to meet its global demand. For example, Foxconn (Hon Hai) committed US$270 million to build a facility in Bac Giang province dedicated to MacBook and iPad production, with a projected capacity of 8 million units annually. Similarly, the assembly of AirPods and Apple Watch has ramped up through partners like Luxshare and Goertek. These investments were made on the assumption that Vietnam would remain a cost-efficient, strategically favorable hub for serving both global and U.S. markets. While the recently announced 46% U.S. tariff on Vietnamese exports has been delayed for 90 days, the underlying risk remains. If the full tariff is implemented after the grace period, capacity intended for U.S.-bound shipments may need to be reevaluated, repurposed, or scaled back, and this will be a challenge to the long-term viability of Vietnam as a key production node for Apple’s U.S. supply chain.
• Cost Pressures and Erosion of Vietnam’s Cost Advantage: The proposed 46% U.S. import tariff on Vietnam-origin Apple products will introduce a substantial cost burden that would significantly undermine Vietnam’s role as a cost-efficient manufacturing hub. Devices such as AirPods, iPads, Apple Watches, and some Mac computers—manufactured or assembled in Vietnam and largely destined for U.S. consumers—would face nearly half their value added as tax when entering Apple’s most profitable market. And this would, in turn, effectively nullify the production cost advantages that Vietnam has through lower wages and operating costs. Although the United States has delayed the implementation of the tariff for 90 days—replacing it with a temporary flat 10% rate—the threat of the full levy still casts uncertainty over the long-term viability of Vietnam-based manufacturing for U.S.-bound Apple products. Should the tariff take full effect, Apple may be forced to increase retail prices by hundreds of dollars on select products to preserve margins, or to even reconsider Vietnam as a core assembly location for the U.S. market. In either case, the looming tariff places financial strain and strategic ambiguity on Apple’s operations in Vietnam, prompting a possible reassessment of production allocation across more favorable trade environments.

In light of the announced 46% U.S. tariff on Vietnamese exports—currently delayed for 90 days and replaced with a temporary flat 10% duty—Apple’s Vietnam-based manufacturing operations face renewed uncertainty. Vietnam has played a pivotal role in Apple’s supply chain diversification, particularly for products such as AirPods, iPads, and Apple Watches. However, with the full tariff still looming, Vietnamese stakeholders may need to reassess the associated risks and perhaps even consider strategic responses to safeguard Vietnam’s position in the global electronics manufacturing landscape.

Key recommendations include:

• Diversify Market Exposure Beyond the United States: Manufacturers in Vietnam, especially those dependent on U.S.-bound Apple production, could explore rebalancing their customer base and strengthening exports to markets less exposed to U.S. tariffs—such as Europe, Southeast Asia, and emerging economies. By leveraging Vietnam’s extensive Free Trade Agreements (FTAs), the Vietnam-based exporters could possibly consider shifting production toward regions that offer tariff stability and sustained demand.
• Build Multi-Market Production Flexibility: To stay competitive as global production hubs, Vietnamese manufacturers and their regional peers could consider investing in manufacturing capabilities that would allow production switching and parallel assembly across multiple countries. Apple’s expanding operations in India—where U.S. import tariffs are comparatively lower at 26%—highlights the need for regional suppliers to develop geographically-flexible capacity. Regional governments could further facilitate this by streamlining cross-border component flows and improving investment frameworks to attract co-located or spillover manufacturing activity.
• Leverage Strategic U.S. Investments for Policy Leeway: Apple’s US$500 billion investment commitment in the United States—while not directly tied to Vietnam—could provide political capital that may be used to push for tariff carve-outs or grace periods. Vietnam, along with Apple and its key suppliers (e.g., Foxconn, Luxshare, Goertek) could work jointly to frame continued investment in Vietnam as complementary to U.S. economic and supply chain goals, and this could potentially open avenues for negotiated trade concessions.