Trump's Tariff Threats Unlikely to Bring iPhone Manufacturing to U.S., Analysts Say

27 May 2025

REUTERS

President Donald Trump has recently intensified his push for Apple to relocate iPhone manufacturing to the United States, threatening a 25% tariff on iPhones produced abroad. Despite these assertions, industry analysts contend that such measures are unlikely to compel Apple to shift its production domestically.

According to a report by The Register, analysts from Morgan Stanley have concluded that a 25% tariff would not sufficiently offset the higher costs associated with the U.S.-based manufacturing. They estimate that producing an iPhone domestically would increase its cost by at least 35%, raising the price of a $999 device to approximately $1,350. This projection accounts for factors such as higher U.S. labor costs and tariffs on components still sourced from China.

Canalys analyst Runar Bjorhovde echoed this sentiment, stating that a 25% tariff would be insufficient to incentivize Apple to move production to the U.S. He emphasized that significantly higher tariffs would be necessary to make domestic manufacturing economically viable for the company.

Beyond financial considerations, logistical challenges also hinder the feasibility of relocating iPhone production to the U.S. Apple would need to construct new factories, train a workforce, and manage increased assembly and testing costs. Morgan Stanley estimates that establishing and operationalizing a new U.S.-based plant would take a minimum of two years.

Apple has acknowledged the complexities of shifting its manufacturing base. In a previous statement, CEO Tim Cook highlighted the lack of vocational manufacturing skills in the U.S. compared to countries like China, which has invested heavily in developing such expertise.

While President Trump's tariff threats aim to bolster domestic manufacturing, analysts suggest that without substantial changes to the economic and logistical landscape, Apple's iPhone production is unlikely to move to the United States in the near future.