While Apple faces a 25% tariff threat from President Donald Trump if iPhones aren’t made in the U.S., veteran Apple analyst Ming-Chi Kuo suggests absorbing tariffs is more viable than shifting production.
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 US.https://t.co/ycTwPmQyEp pic.twitter.com/VPRRpj0caU
— 郭明錤 (Ming-Chi Kuo) (@mingchikuo)
In a recent post, Trump reiterated his demand that iPhones sold in the U.S. be produced domestically, threatening a 25% tariff on devices made in India or other countries. This announcement has sparked concerns among investors and industry analysts about the feasibility and economic implications of such a move.
Kuo argues that absorbing the proposed tariff would be more financially viable for Apple than shifting its assembly lines to the U.S. The analyst has emphasized the complexities and costs associated with relocating production, suggesting that the tariff’s impact would be less detrimental to Apple’s profitability.
Apple’s manufacturing operations are deeply entrenched in Asia, particularly in China and India. The company relies on a vast network of suppliers and contract manufacturers, such as Foxconn and Pegatron, which have established large-scale facilities tailored to Apple’s production needs.
Replicating this infrastructure in the U.S. would require significant investments in facilities, labor, and training, with no guarantee of matching the efficiency and cost-effectiveness of current operations.
Analysts have raised concerns about the potential increase in iPhone prices if production were moved to the U.S. Wedbush Securities estimates that domestically produced iPhones could cost around $3,500 per unit, a significant jump from current prices.
In response to global trade tensions and previous tariff threats, Apple has been diversifying its manufacturing base, increasing production in countries like India and Vietnam. These moves aim to mitigate risks associated with over-reliance on a single region and to take advantage of favorable trade agreements.
Want to see more of our stories on Google?
P.S. Want to keep this site truly independent? Support us by buying us a beer, treating us to a coffee, or shopping through Amazon here. Links in this post are affiliate links, so we earn a tiny commission at no charge to you. Thanks for supporting independent Canadian media!
Please, as if Apple would absorb the tariffs. Their customers will pick up that tab.
Tell me about it!
And it won’t just be US consumers that will pay. Because we know that if Apple increases the price of US-sold iPhones but keeps the international-sold ones lower, they will face retaliation from Trump. So what will end up happening is that they will have to raise prices globally to account for the losses they are taking in the US. That means we and other non-US consumers who had no hand in electing this moron will end up putting money into his and every other American’s pocket.
They all mirror each other. Once Apple raises prices Samsung will too along with Google.
That's not the point of this "exercise". Apple really doesn't care. Just wait for the prices of the new iPhone in September. Samsung will also follow suit. Google will price their Pixel line a tad bit lower to entice the few to switch to Android.
Trump will just go up to 50%, then 80%, then drop back to 30%, and on, and on..lol
And people will like you will gladly pay the [actual] tariff price.
Doesn't matter. Tim still enjoys the smell of Trump's farts.