It's still cheaper to import iPhones with 25% tariffs, than assemble in the US

AppleInsider

Analyst Ming-Chi Kuo says, perhaps obviously, that Trump's new 25% tariff on Apple shouldn't make the company move manufacturing to the US, because it's still far cheaper to import.

A lack of robots are not the the only thing preventing iPhone manufacture in the US

Trump announced his 25% tariff on Apple's iPhones -- for once specifically naming a US business instead of nonsensically claiming foreign countries would pay -- on Friday, May 23, 2025. It immediately sent Apple's share price tumbling, yet again, but analyst Ming-Chi Kuo agrees with AppleInsider and common sense interpretation of the tariffs about the long-term impact.

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

-- (Ming-Chi Kuo) (@mingchikuo)

May 23, 2025

Kuo goes no further than looking at the immediate bottom line cost, but chiefly because that issue alone is compelling enough. One estimate was when Dan Ives calculated it would cost Apple $30 billion more and take at least three years for Apple to move just 10% of its supply chain to the US.

That $30 billion may be optimistic.

Investment firm Morgan Stanley puts the cost at hundreds of billions of dollars. And TSMC's first two processor factories in Arizona have already cost it $40 billion.

If Trump was serious about bringing manufacturing back to the US, he would be investing in education to train up the immense number of skilled engineers required. Instead, the tariffs are political posturing that will cost Apple $900 million in the current quarter.

Apple can take that $900 million hit, and even though the new 25% tariff on its own will add billions to its costs, the company can surely withstand that too.

Only Apple knows what this tariff will cost them in total, however, since the company does not publish sales volumes. Even if it did, the 25% tariff is on the import price rather than the final retail price.

Then, too, the tariffs are on individual iPhone imports and 25% of an iPhone 16 Pro Max will be different to 25% of an iPhone 16.

Kuo is right that Apple should pay the tariff instead of moving manufacturing to the US. However, if Apple did choose to move, it would presumably still be paying the tariff for each of the many years before US production could possibly begin.

Trump says Apple should manufacture in the US, and he says that his tariffs discourage investment in other countries. Instead, they are solely accelerating that investment in foreign countries.

Apple's recent reorganizing of its supply and distribution chains to minimize the impact of the "reciprocal" tariffs, though, is just the latest in the company's years of maneuvering. While moving away from China is partly about reducing over-reliance on one source, it's also long been about tariffs.

Back in 2018, iPhone assembly firm Pegatron was reported to be moving from China because of trade tensions. By 2024, Apple suppliers had already spent over $16 billion on plans to reshore to places such as India.

Even in the midst of Trump's tariffs, Foxconn is not looking to move to the US, it is planning to double iPhone production in India by the end of 2025.

So the tariffs don't hurt other countries. They just see US businesses taking the hit -- and eventually, passing it on to their buyers.



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22july2013

Given a choice between two identical products (like iPhones, forks, or cashew nuts) where one says "Made in X," where X is a dictatorship, and the other says "Made in Y," where Y is a democracy, I would pay for the one made in Y, even if it's at a much higher price. I realize not many people care about human rights or the environment like I do. I haven't met a single person who shares my values and would buy the higher priced item.

edited May 23

wesley_hilliard

22july2013 said:

Given a choice between two identical products (like iPhones, forks, or cashew nuts) where one says "Made in X," where X is a dictatorship, and the other says "Made in Y," where Y is a democracy, I would pay for the one made in Y, even if it's at a much higher price. I realize not many people care about human rights or the environment like I do. I haven't met a single person who shares my values and would buy the higher priced item.

I understand the sentiment, but there's an issue. An iPhone made in China/India is going to cost what it does today, let's say $1,000. That same device made in the United States would easily be $5,000, if not more. It's actually impossible to predict the price because of the untold challenges involved in trying to make it happen.

The most feasible way to build an iPhone in the US is to invent a time machine and take control of the global economy in a way that would ensure the US never passes manufacturing to foreign entities.

lordjohnwhorfin

Trump is a moron. Clear as day, the emperor has no clothes. The incompetence, greed and corruption on display at every level of his administration is unprecedented. It’s time for all the press to stop acting as if this five alarm fire was business as usual. 

stabitha_christie

22july2013 said:

Given a choice between two identical products (like iPhones, forks, or cashew nuts) where one says "Made in X," where X is a dictatorship, and the other says "Made in Y," where Y is a democracy, I would pay for the one made in Y, even if it's at a much higher price. I realize not many people care about human rights or the environment like I do. I haven't met a single person who shares my values and would buy the higher priced item.

Given the U.S. isn’t a democracy and has it’s share of human rights issues I’m curious where you would like to see iPhone production moved to. 

anthogag

Apple would probably make Trump happy if they said they will manufacture the most sophisticated components in the US. Leave the assembly and manufacture of secondary components to other countries like China. 

sitime

22july2013 said:

Given a choice between two identical products (like iPhones, forks, or cashew nuts) where one says "Made in X," where X is a dictatorship, and the other says "Made in Y," where Y is a democracy, I would pay for the one made in Y, even if it's at a much higher price. I realize not many people care about human rights or the environment like I do. I haven't met a single person who shares my values and would buy the higher priced item.

India is a democracy though. It’s not a perfect democracy. There has been a weakening of checks on executive power, crackdowns on the free press, and the like. But similar things could be said about other democratic countries.

The iPhone can be assembled in India (a democratic country) and sold in America. And the iPhone can be assembled in Brazil (a democratic country) and sold in America. So that is not the issue. What is happening here is not a choice between products from a democracy or products from a dictatorship. It’s a choice between products from America or products from literally all other countries.

edited May 23

netrox

22july2013 said:

Given a choice between two identical products (like iPhones, forks, or cashew nuts) where one says "Made in X," where X is a dictatorship, and the other says "Made in Y," where Y is a democracy, I would pay for the one made in Y, even if it's at a much higher price. I realize not many people care about human rights or the environment like I do. I haven't met a single person who shares my values and would buy the higher priced item.

 
Trump, like China, is definitely not interested in human rights nor democracy. 
 

designguybrown

Of course, this goes way beyond prices for consumers. Supply lines on-shored and all the piles of subsidiary parts, designers, and assemblers that would sprout up - there could even be districts of consumer digital products' companies within various cities. I would work there for below minimum wage, 60 hours a week, as a high school or college co-op/ summer job. The local schools, JCs, and colleges would be collaborating with the various design, manufacturing, and industrial processes as part of their curriculum. What people don't realize is that bringing back the manufacturing sector is not about returning to your gramp's 1970s blue-collar smelly factories, but re-engaging with a mostly-automated but high-end process that requires great skill to design, construct, and maintain, albeit at 90% less staff, -- good, solid first-world work with endless multiples of community economic spin-off. If TSMC can make a go at it in the US, all top manufacturing can integrate as befits their profits - but it won't be a 4-year process.

kiltedgreen

I’m sure that Tim Cook, and Apple generally, have been waiting for Ming-Chi Kuo to pronounce before they decide on a strategy for iPhone production.

macgui

The most important thing to that convicted felon is that Cook bow to him. He's not concerned with bringing manufacturing back to America. That's theater. He wants the 'Muricans to think he's a hero. He's flexing his ego and doing what he likes doing best — bullying. Well that and self-aggrandizing. And making money at the expense of others.

Cook could just say Fk it and pay the 25% (or additional 25%) indefinitely. It would take years for building a plant to satisfy Trump's whim. No, decades. And that's only if Trump doesn't raise the vig. Cook says Apple can live with 25% and makes no plans to build. Trump would be triggered and probably raise the tariff again if somebody doesn't keep him in check.

What's the answer or is there more than one? I have no idea. Even when he leaves office there will still be a huge mess to clean up and correct. There's no telling how much infamy will live on in the Red Party and celebrated as legacy. I think we're going to see Apple prices get somewhat painful though not impossible (ha!) for most to afford.

carmb

Trump governs the way he campaigns, as if the two are indistinguishable. You can say whatever you like when you're not governing and it will matter not. You can claim that you can use tariffs to get US companies to build stuff in the US. In a very superficial way, it sounds like it could work. Yet in reality, the cost difference in building stuff in the US compared to certain other countries is enormous. The amount of tariff needed to wipe out the difference is such that imposing it would be catastrophic. We have products being sold in the US that are viable at that price point because of lower production costs abroad. Mess with that and the impact on the economy is seismic. If Trump had figured out a way to significantly lower the cost of making stuff in the US then combined it with tariffs to get production to shift to the US, that would be one thing. This isn't that. He's basically trying to end the days of making stuff at a cost that allows for products to be sold at an attractive price point. He might not be aware that that is what he's doing but it is what his approach would cause to happen. It's as if Trump hadn't worked out what the impact of his actions would be and instead conjured up what he wishes his actions would cause to happen, as if wishing it would make it so. It's hard to believe that Trump's grasp of such things is as disconnected from reality as it seems to be. Sometimes I think that this is all just an incredibly vivid dream and at some point I'll just wake up to find the past decade never really happened. 

hammeroftruth

Donald just wants a quiet “donation” to his org.
Maybe he thinks all the cuts to Medicaid and other programs will create workers who would love a soulless job of assembling electronics for pennies. Soon he will realize that you can bully government officials and vulnerable immigrants, but when you take on large corporations that have the cash to fight his racist xenophobic agenda, that’s another story. 

It’s not about jobs here, it’s about foreign governments acquiescing to his demands. Once they reach an under the table bribe, this will mysteriously go away when there will be an unverified announcement that a manufacturing plant will be built in 2035 and will never happen. 

xyzzy-xxx

22july2013 said:

Given a choice between two identical products (like iPhones, forks, or cashew nuts) where one says "Made in X," where X is a dictatorship, and the other says "Made in Y," where Y is a democracy, I would pay for the one made in Y, even if it's at a much higher price. I realize not many people care about human rights or the environment like I do. I haven't met a single person who shares my values and would buy the higher priced item.

Do you think India is a dictatorship?

alandail

Apple forgot to vertically integrate and optimize manufacturing into the product designs because they instead count on cheap labor.

It takes 17 man hours of labor to build 1 iPhone. This doesn't include setup and testing time after it's built.
It takes Tesla 10 man hours hours to build a Model Y. Cybercab will cut this significantly.

Tesla vertically integrated manufacturing, Apple outsourced it to the lowest bidder.

edited May 26

macxpress

alandail said:

Apple forgot to vertically integrate and optimize manufacturing into the product designs because they instead count on cheap labor.

It takes 17 man hours of labor to build 1 iPhone. This doesn't include setup and testing time after it's built.
It takes Tesla 10 man hours hours to build a Model Y. Cybercab will cut this significantly.

Tesla vertically integrated manufacturing, Apple outsourced it to the lowest bidder.

Building a phone and building a car are 2 different things. This is an apples to orange comparison. And you seriously think every component in a Tesla is made in the US? 

Lastly, Apple builds quality products that last years with excellent fit and finish, Tesla doesn't. They're on the bottom of nearly every reliability vehicle rankings. Get off your Tesla high horse and get into the real world buddy. Maybe if they spent more time designing and building they could have better quality vehicles. 

macxpress

Donald Trump is a complete idiot. He has no knowledge of economics and yet he prides himself as a successful businessman...one who has bankrupted nearly every company he's ever owned/operated. I absolutely cannot believe we re-elected this idiot yet again. It's gonna be a long 3.5yrs folks!