Kuo: Apple Better Off Taking 25% Tariff Hit Than Move iPhone Production to US

[MacRumors]

It would be more financially viable for Apple to absorb a 25% import tariff on iPhones sold in the United States than to relocate its assembly operations to the U.S., Apple analyst Ming-Chi Kuo today said.

Kuo, a respected analyst with a long track record of accurate forecasts about Apple's supply chain, made the statement on X (formerly Twitter) in response to renewed pressure from former President Donald Trump for Apple to shift iPhone production to the United States. The comment follows President Trump's threat to impose a 25% tariff on all iPhones not assembled domestically.

In terms of profitability, it's way better for Apple to take the hit of a 25% tariff on iPhones sold in the US market than to move iPhone assembly lines back to [the] US.

The analysis alludes to the scale and complexity of Apple's current manufacturing infrastructure, which is deeply rooted in Asia — particularly China and, increasingly, India. Apple relies on an extensive network of suppliers and contract manufacturers such as Foxconn and Pegatron, all of which operate large-scale facilities tailored specifically to Apple's production requirements. These partnerships are supported by decades of logistical refinement and allow Apple to produce iPhones at a volume and cost efficiency that would be difficult, if not impossible, to replicate in the United States under current conditions.

The U.S. plays a relatively limited role in the physical assembly of iPhones, despite being one of Apple's most critical markets. While some components, such as glass from Corning, are American in origin, final iPhone assembly occurs almost entirely overseas. Moving this process stateside would require multibillion-dollar investments in infrastructure, labor, and training, with no guarantee of replicating the scale, cost structure, or speed of existing operations in Asia.

Apple reportedly plans to shift a majority of iPhone production for the U.S. market to India by 2026. According to Bloomberg, Apple intends to source more than 60 million iPhones annually from Indian factories over the next two years. Foxconn, Apple's primary assembly partner, is currently investing $1.5 billion in new manufacturing infrastructure in India. President Trump posted on Truth Social earlier today:

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. If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S. Thank your [sic] for your attention to this matter!

Such a tariff would be unprecedented in scope and could lead to a significant increase in retail prices for iPhones sold in the United States. Wedbush Securities recently estimated that shifting iPhone production to the United States could increase the per-unit cost of an iPhone to approximately $3,500.

With the U.S. iPhone user base estimated at over 120 million and annual U.S. iPhone shipments exceeding 60 million units, even a 25% tariff would represent a smaller financial burden than the capital expenditures and operational challenges required to replicate its Asian supply chain in America. Apple's shares fell 3% in pre-market trading following the President's comments.

Note: Due to the political or social nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Kuo: Apple Better Off Taking 25% Tariff Hit Than Move iPhone Production to US

 

[BB1970]

But but but.. I thought "foReIgN cOuNtRiEs pAy ThE tArIfFs" 🥴

 

[MLMcMillion]

Obviously. Anyone with a rudimentary understanding of business and manufacturing understands this. The guy imposing the tariff doesn't, though.

 

[cocky jeremy]

Trump just needs to accept some stuff isn't going to be built here. The idea of it sounds great until you get into the details. It's just not happening.

 

[HouseLannister]

But will Apple take the tariff or will the consumer?
And how will this affect Every Other Phone that is also not made in the US?

 

[xmarcuswildx]

And who will pay for it you might ask? Oh yeah that’s right… the American people.

 

[Andres Cantu]

Same thing I commented in the earlier article, but apparently, investors don't like either outcome, so I get all the downvotes 😂

 

[supergt]

I was so looking forward to being one of the millions of folks screwing in the little screws!

 

[bbeagle]

Problem is that if Apple ignores Trump's request to move to the USA - and just pays the 25% tariffs, Trump will just keep increasing the tariffs to 200% or so.

 

[dannys1]

Yeah but that 25% could change weekly - making accounting impossible.

Has anyone place a tariff directly on a specific company before? 😂

 

[ab2c4]

I agree, let the tariffs come, but Trump will deal with the negative consequences at the mid terms.

 

[Skyscraperfan]

What are the tariffs paid for? The retail price of $999 for example or just on the production costs of an iPhone? Maybe Apple could do the last step of the assembly in the US. Then it is technically produced in the US.

 

[TechWhisperer]

The 25% tariff is just the opening move. Trump’s negotiating style relies on escalating pressure until companies capitulate completely, he’ll keep tightening the screws on Apple until they have no choice but to comply. Kuo is missing the political reality of how Trump operates: Trump is a narcissist and will bully Apple until they sycophantically obey.

 

[nfl46]

We’re all paying the price for yall electing his azz. Smh! Hurry up January 20, 2029!

 

[BaldiMac]

What are the tariffs paid for? The retail price of $999 for example or just on the production costs of an iPhone?

Tariffs would be on how much Apple is paying for them, so the production costs in your parlance.

Maybe Apple could do the last step of the assembly in the US. Then it is technically produced in the US.

They'd still have to pay the tariffs on the parts that they imported.

 

[Appleman3546]

A president can implement tariffs on foreign countries, but can a president implement a tariff on an American company specifically? Like, can they single out a US company instead of a foreign country or foreign company?

 

[einsteinbqat]

He might be a name in the the Apple business world/supply chain, but this is politics. And anyone following US politics knows that 25% is just the beginning.

T wants something out of Apple. And it's not necessarily only the manufacturing. It could be something else when he gets Tim to sit down with him.

 

[sw1tcher]

Just have Foxcon announce they're going to build a big and beautiful multi billion dollor iPhone assembly plant somewhere in the U.S. (Wisconsin?) Trump will believe them like he did before. By the end of Trump's 2nd term, Foxcon can say that due to changing market conditions, they have to reduce their planned investment.

 

[JPack]

That's a given. Even at 125%, it's better to stay in China.

 

[BaldiMac]

A president can implement tariffs on foreign countries, but can a president implement a tariff on an American company specifically? Like, can they single out a US company instead of a foreign country or foreign company?

This president doesn't care about what he is allowed to do. He only claims the authority for any of these tariffs by lying that there is a national emergency.

 

[ifxf]

Love to see Apple start manufacturing phones in America but move design overseas since Trump apparently places zero value in the design process.

 

[sw1tcher]

A president can implement tariffs on foreign countries, but can a president implement a tariff on an American company specifically? Like, can they single out a US company instead of a foreign country or foreign company?

If he can target universities and law firms with his grievances, he'll find a way to target Apple.

 

[jmonster]

A president can implement tariffs on foreign countries, but can a president implement a tariff on an American company specifically? Like, can they single out a US company instead of a foreign country or foreign company?

You are watching real time that they can do anything they want, with Supreme Court immunity, until congress steps in. Which they've made clear there will be no line that compels this.

So just enjoy watching our rapid demise.

 

[FriednTested]

Trump just needs to accept some stuff isn't going to be built here. The idea of it sounds great until you get into the details. It's just not happening.

True. Like the new fad is them shouting at the top of their lungs about how some giant reserves of lithium have been discovered and they are all going crazy over how America does not need to import that anymore.

Little do they realize that it will be at least a decade till that mine is fully operational and even if it will be actually competitive in cost keeping in mind all the regulations. Also you need people to work those mines. I don't think the current American GenZ/Millenial is looking forward to working in mines.

 

[salz4life]

Trump just needs to accept some stuff isn't going to be built here. The idea of it sounds great until you get into the details. It's just not happening.

His followers don't understand it, so whether The President does or doesn't isn't of much value. "Made in America" is just a blanket term of importance (like 'Make America Great Again' and 'Make America Healthy Again' and 'Big Beautiful Bill', etc.) for that voter base.