AP Technology Writer Michael Liedtke
SAN FRANCISCO (AP) – Stripped by Apple’s plan to make a large portion of the US iPhone in India, President Donald Trump on Friday threatened to slap 25% tariffs on popular devices unless the tech giant starts building products in his home country.
For decades, Apple has built most of its devices in China. There, they invest in large factories in tens of thousands of dollars that rely on a vast network of local suppliers. The company’s reliance on key pipelines outside the US has thrust tech trendsetters into the intersection of Trump’s trade war.
In response to Trump’s fight with China, Apple CEO Tim Cook said earlier this month that most iPhones sold in the US between March and June come from India. Trump in late April decided to temporarily exempt iPhones and other electronic devices from most of the initial tariffs, but Cook said the trade war would cost an additional $900 million between March and June.
After Trump first announced his drastic tariffs in early April, industry analysts estimated that the fees would increase the cost of a $1,200 iPhone made in China to $1,500. That may sound steep, but most analysts believe that if Apple can somehow start manufacturing iPhones in the US, the device’s price could skyrocket to at least $2,000, possibly reaching $3,500.
The obstacles to shifting Apple’s production domestically include the complex supply chain that Cook worked for Steve Jobs, a co-founder of the company he predecessor, in the 1990s. The company’s last fiscal year.
“The concept of building an iPhone in the US is a non-starter,” says Dan Ives of Wedbush Securities Analyst, reflecting a widely held view in the investment community tracking every move at Apple. He estimated that the current $1,000 price tag for iPhones made in China or India would skyrocket to over $3,000 if production shifted to the US.
In a survey note on Friday, Ives predicted that Cook would be engaged in a “game of negotiation” with Trump, which will spare the iPhone from 25% tariffs.
Planning for the future is becoming more difficult for Apple and other tech companies amid the rapid rise in artificial intelligence. As AI becomes more refined, the technology could create future waves of hands-free, screenless devices that reduce the demand for smartphones.
“I might not need an iPhone in 10 years, but it’s so crazy that I can hear it,” Apple’s Executive Eddie Cue said earlier this month in a trial over Google’s proposal to break up, which the U.S. Department of Justice operates an illegal monopoly in searches.
Apple did not immediately respond to a request for comment on Friday. In a quarterly revenue call in early May, Cook told investors that tariffs had a “limited impact” on the company in the March quarter as it was able to optimize its supply chain. However, Cook warned that “we don’t know what will happen with tariffs, so it’s “very difficult” to predict after June.
File – Sales staff work at an Apple Shop in Hanoi, Vietnam on Thursday, April 10th, 2025.
File – The new iPhone 16 will be displayed on Monday, September 9, 2024 during the launch of a new product at Apple headquarters in Cupertino, California (AP Photo/Juliana Yamada, file)
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File – Sales staff work at an Apple Shop in Hanoi, Vietnam on Thursday, April 10th, 2025.
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The big question is how long Apple will hold at current prices if Trump’s threatened tolls become unbearable and consumers are asked to take part in the burden. Even if tariffs are not escalated, many analysts predict that Apple will raise iPhone prices this fall. With the latest models normally released, there is a prospect that consumers could splurge on upgrades this summer.
One of the main reasons Apple has wiggle room to keep the line at current iPhone pricing is that it continues to earn big profit margins from revenue generated by subscriptions and other services tied to its products, Dipanjan Chatterjee said. The division, which raised $96 billion in revenue during Apple’s past fiscal year, remains unexplained by Trump’s tariffs.
“Apple can absorb tariff-induced increased costs, at least in the short term, without any significant economic impact,” Chatterjee said.
But now, Apple is facing a significant decline in service revenue after a federal judge recently issued an order banning commission collection on transactions within iPhone apps processed by other payment systems other than itself. Unless Apple appeals, the decision could cost the company billions of dollars a year.
Apple tried to appease Trump in February by announcing plans to spend $500 billion by 2028 and employ 20,000 people in the US, but it wasn’t linked to building an iPhone domestically. Instead, Apple has pledged to fund the Houston Data Center, an artificial intelligence-powered computer server. This is a technology the company is expanding as part of the industry-wide trend.
U.S. Secretary of Commerce Howard Lutnick also predicted that tariffs would force a manufacturing shift during his appearance on the April 6th CBS News program. “A military of millions of humans have screwed small screws in to make iPhones, and that kind of thing will come to America,” Rutnick said.
However, when appearing at a conference in China in 2017, Cook expressed doubt about whether there are enough workers in the US labor pool who have the vocational skills necessary to do the laborious, boring and boring jobs that Rutnick was discussing.
“In the US, we don’t know if we can hold meetings of touring engineers and fill the room,” Cook said. “In China, multiple soccer fields can be filled.”
Original issue: May 23, 2025 11:41am EDT
