The Trump administration has long claimed that steep tariffs on Chinese imports would drive Apple to start making iPhones in the U.S.
But that shift remains highly unlikely – even with U.S. tariffs now reaching 145% on goods made in China, where Apple has assembled most of its iPhones since their debut 18 years ago.
Apple’s deep-rooted supply chain in China, developed over decades, poses a major hurdle. Moving production stateside would take years, cost billions and expose Apple to higher labor and manufacturing expenses that could triple the iPhone’s price – risking a major blow to its global sales.
The company might get a reprieve. The Trump administration said late Friday it was excluding electronics, including smartphones, from the current reciprocal tariffs. But it still could levy new or different tariffs on electronics at a later date.
“The concept of making iPhones in the U.S. is a nonstarter,” said Wedbush Securities analyst Dan Ives, reflecting a widely held view in the investment community that tracks Apple’s every move. He estimated that the current $1,000 price tag for an iPhone made in China or India would soar to more than $3,000 if production shifted to the U.S. He also believes domestic production couldn’t begin until at least 2028.
“Price points would move so dramatically, it’s hard to comprehend,” Ives said.
Apple didn’t respond to a request for comment Wednesday. The Cupertino, California-based company has yet to publicly discuss its response to Trump’s tariffs on China, but the topic may come up May 1 when Apple CEO Tim Cook is scheduled to field questions from analysts during a quarterly conference call.
There’s little doubt the China tariffs will be a hot-button issue, given Apple’s stock price has dropped 15% – wiping $500 billion off the company’s market value – since Trump began raising them April 2.
If the tariffs hold, Apple is widely expected to eventually raise the prices of iPhones and other popular products because Silicon Valley’s supply chain is heavily concentrated in China, India and other overseas markets caught in the crossfire of the escalating trade war.
The big question is how long Apple might be willing to hold the line on prices before the tariffs’ toll on profit margins becomes too much to bear – and consumers are asked to shoulder some of the burden.
One reason Apple has some wiggle room is that it continues to reap huge profit margins from the subscriptions and services tied to its products, said Forrester Research analyst Dipanjan Chatterjee. That division, which generated $96 billion in revenue during Apple’s last fiscal year, remains untouched by Trump’s tariffs.
“Apple can absorb some of the tariff-induced cost increases without significant financial impact, at least in the short term,” Chatterjee said.
Apple tried to appease Trump in February by announcing plans to spend $500 billion and hire 20,000 people in the U.S. through 2028 – but none of it was tied to making iPhones domestically. Instead, Apple pledged to fund a Houston data center for servers powering artificial intelligence – a technology the company is rapidly expanding into amid an industrywide craze.
When asked this week whether Trump believes Apple intends to build iPhones in the U.S., White House Press Secretary Karoline Leavitt pointed to Apple’s investment pledge as evidence the company thinks it could be done.
“If Apple didn’t think the U.S. could do it, they probably wouldn’t have put up that big chunk of change,” Leavitt said.
U.S. Commerce Secretary Howard Lutnick also predicted the tariffs would force a manufacturing shift during an April 6 appearance on a CBS News program.
“The army of millions and millions of human beings screwing in little screws to make iPhones – that kind of thing is going to come to America,” Lutnick said.
But during a 2017 appearance at a conference in China, Cook expressed doubt about whether the U.S. labor pool had enough workers with the vocational skills required for such painstaking and tedious work.
“In the U.S., you could have a meeting of tooling engineers, and I’m not sure we could fill the room,” Cook said. “In China, you could fill multiple football fields.”
Trump also tried to pressure Apple – to no avail – into shifting iPhone production to the U.S. during his first term. The administration ultimately exempted the iPhone from the tariffs he imposed on China back then, a period when Apple had announced plans to invest $350 billion in the U.S.
Trump’s first-term tariffs also pushed Apple to start making some iPhones in India and other products in Vietnam.
Cook later took the president on a 2019 tour of a Texas plant where Apple had been assembling some Mac computers since 2013. Shortly after the visit, Trump claimed credit for opening the plant – even though Apple launched it while Barack Obama was president.
“Today I opened a major Apple manufacturing plant in Texas that will bring high-paying jobs back to America,” Trump posted on Nov. 19, 2019.
