Kuo: Tariffs Would Cost Apple Less than US iPhone Production
Credit: Apple
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Apple supply chain analyst Ming-Chi Kuo on Friday said Apple would be better off financially by simply absorbing a threatened 25% import tariff on iPhones sold in the United States rather than moving its iPhone assembly operations to the US.
Kuo, who has a well-deserved reputation for forecasting Apple’s product releases and other activities, posted his comments on X as a response to President Trump’s continuing pressure on Apple to move iPhone production stateside. President Trump recently threatened to put a 25% tariff on any iPhone not assembled inside US borders.
Kuo’s comments likely refer to the complexity and scale of Apple’s manufacturing infrastructure, which, while primarily rooted in China, also includes facilities in India, Vietnam, Brazil, and other countries. Apple has an extensive global network of suppliers it relies on, including companies like Foxconn and Pegatron, which operate massive facilities set up specially to handle Apple’s production needs.
The entire system has been refined over multiple decades, allowing Apple to produce its iPhones, as well as its other devices and accessories, at a large volume as cheaply as it can. Replicating the production scale in the United States would be highly difficult, if not entirely impossible, to pull off.
While the United States is one of Apple’s largest markets, it plays a minor role in the actual assembly of its iPhones. Some iPhone components, such as the Gorilla Glass for the iPhone’s display (Made by Corning), originate in the US. Still, the final assembly of the iPhone and other Apple devices is done in different countries. Moving that infrastructure to the United States would be prohibitively expensive, as it would require investments in the billions of dollars to replicate the scale and efficiency of the company’s existing foreign operations.
Apple is planning to shift the majority of iPhone production destined for the US to India by 2026. Bloomberg reports Apple intends to import more than 60 million iPhones from Indian facilities over the next two years. Apple’s largest assembly partner, Foxconn, is in the process of making a $1.5 billion investment in new manufacturing capabilities in India.
A tariff such as that threatened by President Trump would be an unprecedented move, leading to an uncomfortably large increase in iPhone retail prices in the US. Wedbush Securities recently claimed its estimates indicate that moving iPhone production to the US could increase the per-unit cost of making an iPhone to around $3,500.
Trump’s warning came via his Truth Social account after Apple Tim Cook revealed earlier this month that his company would move iPhone production to India. The move is an attempt by Apple to lessen the effects of the ongoing US-China tariff/trade war.
