India's Trade Negotiations with the US Take a Hit After Trump's Apple Comments

India has invested billions of dollars in teaming up with the US against China, hoping to lure business away from its giant neighbor. But after President Trump changed his tactics with China, hitting India with a 26 percent tariff, things are looking tougher for India and its American business partners. Trump's recent comments about Apple, which is shifting some of its iPhone assembly to India, have added a new complication to the already complex negotiation.

Key Takeaways:

• India's prime minister, Narendra Modi, had a cozy relationship with Mr. Trump, but recent comments have complicated their trade negotiations.
• India had been positioning itself to take advantage of the trade war between the US and China, but Trump's change of heart has put India at a disadvantage.
• Trump's comments about Apple's production have caused a collective double take, as the company had been shifting some of its manufacturing capacity from China to India.
• India's government and business leaders are working to secure a reduction in the 26 percent tariff, which would make it easier for companies like Apple to do business in the country.
• Labor costs in India are low, and local governments have invested in infrastructure to support manufacturing, making it a attractive location for companies looking to diversify their supply chains.
• Trump's comments about Apple's production were seen as a slap in the face for India, which has been trying to establish itself as a viable location for American companies looking to reduce their dependence on China.
• Indian officials were in Washington this week trying to hash out a deal, but the complex dynamic between Trump and India's government is making it difficult to predict what will happen next.

Statistics:

• 25 percent or more of iPhones are expected to be made in India by the end of this year (Counterpoint Research).
• Labor costs in India are equivalent to $233 per month for localized jobs, which is competitive with costs in China.
• It took over a decade for Apple to set up a supply chain in China, and it took over five years to reach some capacity in India (Counterpoint Research).
• India's national government has been subsidizing the manufacture of high-tech goods since 2020 (source not specified).
• India's advantage in manufacturing includes low labor costs, government support for infrastructure, and the development of a local ecosystem of talent and supply (factory managers).

Sources:

• "Apple and India Have Invested Big in a Partnership Against China" by "NEW YORK TIMES"
• Piyush Goyal, Commerce Minister of India, Twitter post
• Howard Lutnick, U.S. Trade Representative, interview with Piyush Goyal