Reinstating manufacturing and businesses within the United States has frequently been the declared aim of U.S. President Donald Trump’s administration as it currently engages in an enduring trade conflict with the global community.
His government has been forecasting its
barrage of tariffs
Falling out with China could lead American technology behemoth Apple to produce iPhones in the United States for the very first time.
However, this is still an improbable situation despite the current US tariffs amounting to 145 percent on goods produced in China—the nation where Apple has predominantly manufactured its products.
iPhones
Since the initial version was released into the market 18 years ago.
The disincentives for Apple shifting its production domestically include a complex supply chain that it began building in China during the 1990s.
Constructing new factories in the United States would require multiple years and consume billions of dollars. This approach might also force Apple to face financial pressures that could cause the price of an iPhone to increase threefold, potentially sinking sales of their flagship item.
“Proposing to manufacture iPhones in the U.S. is not feasible,” stated Dan Ives, an analyst at Wedbush Securities, echoing a common perspective within the investment sector that closely monitors Apple’s activities.
He estimated that the current $1,000 (€879) price tag for an iPhone made in
China
In India or elsewhere, costs could rise above $3,000 (€2,638) if manufacturing were moved to the U.S. He thinks domestic production might not start before as early as 2028.
Ives further noted that “the price points would shift so drastically, it becomes difficult to grasp.”
On Wednesday, Apple did not reply to the Associated Press’ request for commentary.
Increase expected on iPhone prices
The firm based in Cupertino, California, has not yet addressed its stance on President Trump’s tariffs imposed on goods imported from China. However, this subject might be brought up on May 1st when Apple CEO Tim Cook is expected to answer queries from financial analysts during a quarterly earnings call aimed at discussing the corporation’s fiscal outcomes and strategic plans.
There is no question that the China tariffs will be a contentious topic, considering Apple’s stock price has declined by 15 percent, reducing the company’s market valuation by $500 billion (€440 billion), ever since Trump started escalating these charges on April 2nd.
Should the tariffs remain in place, Apple is anticipated to ultimately increase the prices for iPhones and various other top-selling items. This prediction stems from the fact that much of Silicon Valley’s supply chain relies heavily on manufacturing bases located in China, India, and other international markets affected by the intensifying trade conflict.
The major issue at hand is determining how long Apple will maintain its present pricing strategy as the impact of tariffs on the company’s profit margins becomes increasingly significant. Eventually, consumers may have to absorb part of this financial strain.
A significant factor enabling Apple to maintain its present iPhone prices despite ongoing Chinese tariffs is the substantial profit margins derived fromsubscriptions and various service-related revenues associated with their products, according to Forrester Research analyst Dipanjan Chatterjee.
The division, which generated $96 billion (€84.5 billion) in revenue for Apple during their previous fiscal year, has not been affected by Trump’s tariffs.
“Apple can absorb some of the tariff-induced cost increases without significant financial impact, at least in the short term,” Chatterjee said.
American investments aimed at satisfying Trump
In February, Apple attempted to mollify Trump by declaring intentions to invest $500 billion and create 20,000 jobs in the U.S. by 2028, however, these initiatives did not include domestic production of iPhones.
In lieu of that, Apple committed to financing a data center in Houston equipped with server computers designed for artificial intelligence—a field the company is increasingly venturing into amid a widespread industry trend.
This week, when questioned about Trump’s belief regarding Apple’s intention to manufacture iPhones in the United States, White House Press Secretary Karoline Levitt cited Apple’s investment pledge as proof that the company feels it might be achievable.
“If Apple believed the United States couldn’t manage it, they likely wouldn’t have invested such a significant amount of money,” Leavitt stated.
The US Commerce Secretary Howard Lutnick similarly forecasted that tariffs would lead to a change in manufacturing practices during his April 6 appearance on a CBS news show.
“The army comprising millions upon millions of individuals assembling tiny components to manufacture iPhones, something like this will eventually reach American shores,” stated Lutnick.
However, during an event held in China in 2017, Cook voiced his concerns regarding whether the American workforce possessed sufficient individuals skilled in trades necessary for performing the meticulous and arduous tasks mentioned by Lutnick.
“Cook mentioned that in the United States, gathering tooling engineers might not even fill up one room. However, in China, their numbers would be sufficient to fill several football stadiums,” he added.
During his first term as president, Trump attempted to persuade Apple to move iPhone manufacturing to the United States, but this effort was unsuccessful.
However, the administration eventually chose to exclude the iPhone from the tariffs applied to goods coming from China during that time—when Apple declared an investment of $350 billion in the U.S.
During Trump’s first term, the tariffs imposed on China motivated Apple to initiate a move resulting in certain current iPhone models being produced in India and several of its other products being manufactured in Vietnam.
During a 2019 visit to a facility in Texas, Cook led President Trump through an area where Apple has been manufacturing certain Mac models since 2013. After completing this tour, Trump claimed credit for the factory that Apple had established during former President Obama’s tenure.
On November 19, 2019, Trump announced through a post that he had inaugurated an important Apple production facility in Texas, which would result in bringing well-paid employment opportunities back to the United States.
