Donald Trump's recent threat to impose a 25% tariff on iPhones imported into the United States, specifically targeting those manufactured in India, has ignited a flurry of legal and economic discussions. This move, aimed at compelling Apple to shift its production base back to American soil, is likely to face significant scrutiny and potential opposition on multiple fronts.

Legal Challenges and WTO Implications

The legality of Trump's proposed tariff is questionable under both U.S. and international trade law. The U.S. Constitution grants Congress the power to set tariffs, a power that has been partially delegated to the President. However, this delegation is not without limits. Actions taken by the executive branch must adhere to existing trade agreements and international obligations, particularly those established under the World Trade Organization (WTO).

As a member of the WTO, the United States is bound by the General Agreement on Tariffs and Trade (GATT), which promotes non-discriminatory trade practices. The "most-favored nation" (MFN) principle dictates that any trade advantage granted to one member must be extended to all others. Raising tariffs unilaterally, without justification under specific exceptions, is a violation of WTO law. Countries can only increase bound tariffs if they negotiate compensation with affected partners or invoke emergency provisions such as safeguard measures or national security exceptions.

The Trump administration has previously invoked national security under Section 232 of the Trade Expansion Act of 1962 to justify tariffs on steel and aluminum. However, the WTO has ruled against such measures when applied arbitrarily. The use of the International Emergency Economic Powers Act (IEEPA) has also been employed, though its application to tariffs is contentious and may require Congressional or WTO oversight. In fact, the United States Court of International Trade already declared that Trump had overstepped his authority by imposing the "fentanyl tariffs" and "reciprocal tariffs".

Potential Opposition and Lawsuits

California Attorney General Rob Bonta has already warned of potential lawsuits over Trump's tariff threats on iPhones made in India, vowing to protect the rights of California companies amidst trade disputes. The argument here is that such a tariff would disproportionately harm companies like Apple, impacting their competitiveness and potentially violating their rights.

If a country imposes tariffs beyond its agreed limit, it breaches Article II of GATT 1994. Affected members can file complaints through the WTO's Dispute Settlement Body (DSB). The process begins with bilateral consultations. If unresolved, the complainant can request WTO authorization to impose countermeasures, including retaliatory tariffs.

Economic Ramifications and Apple's Response

Trump's tariff threat is primarily motivated by a desire to bring manufacturing jobs back to the United States. He has publicly pressured Apple CEO Tim Cook to shift iPhone production to the U.S., stating that a 25% tariff will be imposed on iPhones made in India or elsewhere if this demand is not met.

However, shifting production to the U.S. presents significant economic challenges. Experts estimate that U.S.-made iPhones would cost considerably more due to higher labor costs, stringent regulations, and the lack of a developed supply chain for electronics manufacturing. Apple's iPhone shipments from India to the United States soared 76% in April 2025.

Despite Trump's pressure, Indian officials express confidence in Apple's commitment. Apple has assured the Indian government that there will be "no change" in its investment plans for the country. Moreover, India's Production-Linked Incentive (PLI) scheme further lowers the effective cost of manufacturing in India, giving Apple even more reasons to stay the course.

Impact on Consumers and the Tech Industry

Tariffs on iPhones and other consumer electronics would likely result in higher prices for American consumers. Smartphones have become essential for employment, education, and healthcare access across all economic classes. Increased costs could disproportionately burden lower-income households. The tech industry, already grappling with supply chain disruptions and inflationary pressures, would face further uncertainty.

India's Position and Potential Countermeasures

India has emerged as a key manufacturing hub for Apple, with the company producing approximately $22 billion worth of iPhones in the country in the year ending March 2025, a 60% increase from the previous year.

While India has been cautious in its response to the tariffs, the opposition has attacked the government for failing to get a reprieve despite the "camaraderie" between PM Modi and Trump. India is unlikely to impose counter-tariffs on the US and focus on finalizing the bilateral trade agreement as quickly as possible after the Donald Trump administration slapped a 26% duty on exports from the country.

Conclusion

Donald Trump's proposed 25% tariff on Indian iPhones is a complex issue with significant legal, economic, and political ramifications. The measure faces potential challenges under U.S. and international trade law, may encounter opposition from within the U.S., and could disrupt global trade relations. While the stated goal is to bring manufacturing back to the U.S., the economic realities and potential consequences for consumers and the tech industry suggest that this policy may face significant headwinds. The situation remains fluid, and the ultimate outcome will depend on a variety of factors, including legal challenges, trade negotiations, and Apple's strategic decisions.