Apple CEO Tim Cook Discusses Tariff-Related Costs and Estimates Impact on Q3

Apple CEO Tim Cook stated that tariffs will further impact costs in the current quarter. The company incurred $800 million in tariff-related costs in the June quarter and estimates an additional $1.1 billion in costs for the September quarter, assuming current tariff policies do not change.

Apple Inc. (AAPL) is set to face higher tariff-related costs in the current quarter, with the company estimating an additional $1.1 billion in tariff costs for the September quarter, following a $800 million hit in the June quarter [1]. This escalation in tariff expenses comes amidst a complex global trade environment and ongoing trade tensions between the United States and China [2].

During Apple's earnings call on Thursday, July 31, 2025, CEO Tim Cook shared these projections with investors. He attributed the bulk of the tariff costs incurred in the June quarter to the International Emergency Economic Powers Act (IEEPA) tariffs imposed on Chinese goods [2]. The company's Chief Financial Officer, Kevan Parekh, also noted that these estimates should not be used to make projections for future quarters due to the potential for changes in tariff rates [3].

Apple's strong financial performance in the June quarter, marked by a 10% year-on-year revenue growth to $94.04 billion, was highlighted by Tim Cook. The company's net profit rose by 9.2% to $23.42 billion, surpassing Wall Street expectations [1]. Despite the tariff-related costs, the company reported record sales across iPhone, Mac, and Services divisions, with significant growth in emerging markets such as India, Brazil, and South Asia [1].

However, the rising tariff costs are expected to impact Apple's gross margin, which fell to 46.5% in the June quarter, primarily due to these additional expenses [3]. The company's guidance for the next quarter anticipates mid- to high single-digit revenue growth, with a gross margin range lowered by the expected $1.1 billion tariff cost [3].

Apple's strategic response to the tariff environment includes plans to open new stores in India and the UAE, building on its recent launch of an online store in Saudi Arabia [1]. The company is also investing in its supply chain, with commitments such as the $500 billion U.S. investment over the next four years, including $0.5 billion with MP Materials and the opening of an Apple Manufacturing Academy in Detroit [3].

In conclusion, while Apple continues to report strong financial performance, the escalating tariff costs pose a significant challenge. The company's ability to navigate this complex trade environment and maintain its growth trajectory will be crucial for investors to monitor.

References:
[1] https://www.etnownews.com/companies/tariff-fallout-apple-takes-hit-of-800-million-in-q3-revenue-sees-more-pain-in-q4-article-152386905/amp
[2] https://sea.mashable.com/tech/38863/tim-cook-apple-faces-a-11-billion-tariff-bill-this-quarter
[3] https://www.fool.com/earnings/call-transcripts/2025/08/01/apple-aapl-q3-2025-earnings-call-transcript/