Apple is staring down a major supply chain and pricing dilemma after President Donald Trump on Friday threatened to impose a 25% tariff on all iPhones sold in the United States unless the tech giant begins manufacturing the devices domestically.
Trump’s remarks, posted on Truth Social and reiterated later to reporters at the White House, are the latest escalation in his push for US-based production by large multinationals.
“I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump wrote, warning that otherwise “a Tariff of at least 25% must be paid by Apple.”
The president’s comments come as Apple has been ramping up production in India, seeking to diversify away from its heavy reliance on Chinese manufacturing amid rising geopolitical tensions and pandemic-era disruptions.
CEO Tim Cook recently said more iPhones sold in the US would be made in India, a shift that may now be politically fraught.
Analysts say iPhone making in the US unfeasible; say threat a negotiation tactic
Apple shares dropped almost 3% on Friday trading following Trump’s post, falling to $195.44.
The prospect of steep tariffs raised concerns across financial markets, with analysts warning of significant cost implications and logistical hurdles should Apple try to comply.
Wedbush analyst Daniel Ives estimated that manufacturing iPhones in the US could push retail prices to $3,500, a dramatic increase from today’s average $1,000.
“We see no chance that iPhone production starts to happen in the US in the near-term given the upside down cost model and Herculean-like supply chain logistics needed for such an initiative,” Ives wrote in a research note on Friday.
Morningstar analyst William Kerwin echoed those sentiments, describing domestic iPhone manufacturing as unfeasible in the medium term.
“To us, this is a negotiating tactic aimed at driving greater US investment from Apple, likely in the form of domestic chip investment and potentially production of lower-volume devices than the flagship iPhone,” he said.
Potential strategies for Apple under tariff threat
Faced with this new pressure, Apple may explore various strategies to blunt the impact of a potential tariff hike.
Morgan Stanley analyst Erik Woodring suggested that Apple could cut less profitable models from its iPhone lineup, focusing instead on higher-margin units to reduce the blow.
A “targeted iPhone mix shift could significantly minimize the tariff headwind,” Woodring wrote in a note to clients last month.
Another option floated by analysts involves stretching the product release cycle.
Bank of America analyst Wamsi Mohan said Apple could switch from an annual to a biennial launch schedule, simplifying supply chains and production timelines.
Apple may also decide to confront the administration directly, publicly tying higher prices to Trump’s trade stance.
One proposal discussed in analyst circles is for Apple to add a “tariff surcharge” to each US sales receipt, making consumers aware of how much more they’re paying because of the new tariffs.
Constraints that limit Apple’s US production
For now, most analysts agree that relocating iPhone production to the US is impractical.
Apple’s manufacturing relies heavily on China-based partner Foxconn, which employs hundreds of thousands of workers and taps into a dense web of suppliers, logistics firms, and engineers—none of which are easily replicable in the US.
“The idea of Apple producing iPhones in the US is a fairy tale that is not feasible,” Ives said, adding that even if the company decided to pursue the move, it would take five to ten years to make it a reality.
The challenges are not new.
In 2011, when President Barack Obama asked Apple co-founder Steve Jobs what it would take to make iPhones in the US, Jobs reportedly replied, “Those jobs aren’t coming back,” referring to Asia’s unmatched industrial infrastructure and labour scale.
Some of Apple’s suppliers, such as Taiwan Semiconductor Manufacturing Company, are expanding US operations under pressure.
However, Foxconn appears unlikely to significantly boost its American footprint.
The firm scaled back a highly publicized $10 billion Wisconsin plant and has instead committed $1.49 billion to its India operations.
Likely bearing of 25% tariff on Apple’s earnings
UBS analyst David Vogt estimated that if a 25% tariff were applied to 70 million iPhones annually imported from China and India, Apple’s earnings per share could take a hit of about $0.51.
Wall Street currently expects Apple to earn $7.18 per share this fiscal year.
As pressure mounts from Washington, Apple is left navigating a volatile mix of political demands, economic realities, and consumer expectations.
Whether Trump’s threat is a hard policy shift or a negotiation tactic, it has already forced a reckoning over the limits of globalization and the fragility of tech supply chains.
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