Smartphone sales are slumping due to low consumer interest and import taxes difficulties
The global smartphone market is facing a period of sluggish growth and even slight decline in shipments, as reported by IDC and Canalys analysts. This trend is partly attributed to the impact of US trade policies, which have introduced uncertainty, higher costs, and complex supply chain challenges for major vendors such as Samsung, Apple, and Xiaomi.
The global smartphone market is experiencing a challenging environment, with macro-economic challenges, tariff issues, and weak consumer demand contributing to nearly flat or slight declines in 2025 shipments. Tariffs and geopolitical tensions, particularly those related to the US–China trade war and subsequent threatened levies, have forced companies to adjust production and distribution strategies to avoid punitive duties.
Samsung, one of the world's leading smartphone manufacturers, forecasted a 56% drop in profit due in part to trade woes. This decline is attributed to weaknesses in the semiconductor division, offset somewhat by strong smartphone sales early in 2025. However, uncertainty over US trade policies—including threats of new tariffs on smartphones from South Korea starting August 2025—have caused concern and forced Samsung to shift sourcing and increase manufacturing outside China, particularly to India.
Apple faces challenges from inventory buildup in the US as it prepares for possible import tax changes. The looming tariffs disrupt planning and increase supply chain complexity, making "China plus one" production models attractive to hedge risks associated with US-China trade tensions.
While less detailed data is available, Xiaomi, as a major Chinese brand, is indirectly impacted by tariff worries and supply chain shifts. Like other Chinese vendors, Xiaomi benefits from strategies to diversify production beyond China to minimize tariff exposure and maintain market presence amid US trade restrictions.
Companies are increasingly adopting a "China plus one" approach, spreading production across countries such as India, Indonesia, Brazil, Mexico, Thailand, and Bangladesh to reduce exposure to US tariffs on Chinese imports. Tariffs on components and finished smartphones originating from China significantly increase production costs, squeezing profit margins and ultimately leading to higher consumer prices.
These trade policies have created cost pressure via tariffs that partially offset growth in some companies, increased supply chain complexity, caused inventory stockpiling in anticipation of tariff changes, undermined profitability, especially for companies like Samsung, and led to volatile market dynamics with mixed shipment growth results and cautious consumer demand outlooks in 2025.
In essence, these trade policies are reshaping the global smartphone industry, pushing major vendors toward diversified manufacturing footprints while grappling with the economic impact of tariffs and geopolitical uncertainty. The global smartphone industry experienced a 1% decline in shipments in the recent quarter, marking the first decline in six quarters. IDC had previously lowered its forecast for smartphone shipments in 2025 amid tariff and trade uncertainty, estimating a worldwide increase of only 0.6% over last year.
Demand for new smartphones is expected to be driven by price-conscious buyers looking for a good deal to replace their old devices. As the market stabilizes, analysts predict a return to growth in the smartphone industry. However, the ongoing political challenges, the impact of war, and the complexities posed by tariffs will continue to affect the smartphone industry in the near future.
In the wake of the US-China trade war and threatened tariffs, tech giants like Samsung, Apple, and Xiaomi are adjusting their production and distribution strategies to mitigate punitive duties, leading to increased manufacturing outside China and a shift towards a "China plus one" approach, based on production in countries such as India and Thailand.
The economic impact of tariffs and geopolitical uncertainty is causing cost pressure, increased supply chain complexity, and uncertain consumer demand outlooks, forcing companies to maintain a cautious approach, even as demand for cost-effective smartphones increases among price-conscious buyers.
