Apple CEO Tim Cook used part of the company’s fiscal Q3 2025 earnings call to address a growing cost pressure that has little to do with supply chains or raw materials, and everything to do with geopolitics: tariffs.

Cook disclosed that Apple (AAPL) absorbed roughly $800 million in tariff-related costs during the June quarter and expects that figure to climb to $1.1 billion in the September quarter, assuming no changes to current global tariff policies. 

“Finally, the situation around tariffs is evolving, so let me provide some color there,” Cook told investors. “For the June quarter, we incurred approximately $800 million of tariff-related costs. For the September quarter, assuming the current global tariff rates, policies and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add about $1.1 billion to our costs.”

Trade Tensions Pressure Margins

The acknowledgment of higher tariff costs highlights the headwinds Apple faces from ongoing trade disputes and shifting policy environments. With global supply chains deeply intertwined — especially in China, where much of Apple’s manufacturing still occurs — tariffs can significantly squeeze operating margins.

Cook stopped short of detailing which product lines or geographies are most affected, but warned that projecting beyond the September quarter is difficult. “This estimate should not be used to make projections for future quarters as there are many factors that could change, including tariff rates,” he clarified.

Investor Concerns: Impact on Pricing and Profitability

For investors, the tariff discussion raises immediate questions: Will Apple absorb the increased costs and take the hit to margins, or will it pass some of the burden on to consumers through higher prices?

Historically, Apple has attempted to shield its customers from sudden price jumps on flagship products, instead optimizing its supply chain or adjusting regional pricing strategies to offset trade friction. However, a $1.1 billion quarterly cost increase is significant enough to potentially influence gross margin guidance in upcoming quarters.

Geopolitical Risk in Focus

The warning underscores Apple’s ongoing exposure to geopolitical risk, especially as trade policies between the U.S., China, and other manufacturing hubs remain volatile. Apple has made progress in diversifying its production footprint into countries like India and Vietnam, but the scale of those operations still lags behind its exposure to China.

If tariffs persist or expand, Apple may face renewed pressure to accelerate diversification — a move that could require additional capital expenditures and take years to fully implement.

Macro Context

The global tariff landscape remains fluid, with recent policy debates in both Washington and Beijing signaling that tech products are likely to remain in the crosshairs of trade negotiations. For Apple, the stakes are high; any escalation in tariffs could weigh on both earnings and investor sentiment, particularly if cost pressures coincide with weaker consumer demand.

While the September quarter estimate offers a concrete figure, Cook’s caution about unpredictability serves as a reminder that trade-related costs could swing significantly from quarter to quarter. For now, Apple appears poised to manage the increase without disrupting its product release cadence — but any major policy shifts could change that calculus quickly.