While President Donald Trump wants Apple to make its products in the U.S., the company has long said that it can’t. Now, Trump has threatened a 25% on smart phones. Will this actually bring production stateside?
Many experts say it won’t. That’s because Apple relies on the more populous countries of India and China, where there are more workers with the skills they need and labor is cheaper. In fact, taking the hit of a 25% tariff might actually work out better for Apple than moving production to the U.S.
“In terms of profitability, it’s way better for Apple to take the hit of a 25% tariff on iPhones sold in the U.S. market than to move iPhone assembly lines back to U.S.,” Apple supply chain analyst Ming-Chi Kuo wrote in an X post cited by CNBC.
UBS analyst David Vogt, also cited by the outlet, agreed that the tariffs would be just a “modest headwind” to Apple’s earnings. CNBC noted that the tariff would likely make iPhones more expensive for consumers.
Trump announced his plans to put a tariff on Apple products in a Friday Truth Social post. In it, he expressed frustration with Apple CEO Tim Cook, who he had just met with in Saudi Arabia.
“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” said Trump. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”
CNBC said that Apple declined to comment on the post.
According to CNN Business, Apple “has long contended that it cannot manufacture iPhones in America,” and the company has already “invested billions of dollars training millions of skilled engineers abroad.”
In 2010, Cook’s predecessor, the late Steve Jobs, told former President Barack Obama that America’s education system was an obstacle for Apple, CNN Business noted. Later, Cook said he agreed with Jobs’ assessment.
Additionally, CNBC noted that “supply chains and factories take years to build out, including installing equipment and staffing up,” and that parts in the iPhones might still need to be imported after that build out is complete. For example, it only recently became possible to make apple to make its latest devices in India, even though it began manufacturing there in 2017.
CNBC’s report said that Trump is particularly upset with Apple’s plans to source the majority of iPhones sold in the U.S. from its factory partners in India (instead of China) and not the U.S. Cook confirmed the plan earlier this month. Apple’s most important products are also exempt from tariffs after Trump gave phones and computers a tariff waiver amid his complicated and frequently changing tariff plans.
“We’re skeptical” that the 25% tariff will materialize, wrote Wells Fargo analyst Aaron Rakers of Trump’s recent threat.
Previously, Trump has had a “solid” relationship with Apple, according to CNBC, and during his first term in the White House the company received waivers from tariffs on China. This February, the company even announced that it planned to build an artificial intelligence facility in Texas. The outlet said that it is still possible that the company and the administration will work out a deal, or maybe take the issue to court.
POLITICO reported that California Attorney General Rob Bonta said he’s prepared to sue to defend the state’s companies – including Apple – following the tariff threat.
“We definitely will assess our potential role,” Bonta said in response to a question from POLITICO at a San Francisco press conference. “We will be monitoring what he does, if he does anything, and we’ll make sure that if the law is broken and we have standing to sue, we’ll take appropriate action.”
Per CNN Business, Trump’s tariff would apply to all smart phone makers, citing Trump’s recent comments to reporters. Treasury Secretary Scott Bessent also said in a Fox News interview Friday that Trump is seeking to bring precision manufacturing back to the U.S.
Following their meeting in Saudi Arabia, Cook again met with Trump this week at the White House, an administration official told CNN. That official did not divulge the subject matter of the meeting.