President Donald Trump is threatening Apple Inc. with a tariff of 25% if it doesn’t build iPhones in America.
“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,” Trump said Friday in a post on social-media platform Truth Social. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”
Trump’s latest tariff threat comes a week after his trip to the Middle East where he called out Cook, Apple’s CEO, and his company’s plan to make more iPhones in India to be sold in the United States.
Financial analysts have scoffed at the notion of imposing a steep tariff on Apple to force it to bring iPhone production to the U.S. Under such a scenario, domestic operations “would result in an iPhone price point that is a non-starter for Cupertino (Apple’s corporate headquarters) and translate into iPhone prices of $3,500,” Wedbush Securities analyst Dan Ives said in a note to investors on Friday. “This would take 5-10 years to shift production to the U.S. We believe the concept of Apple producing iPhones in the U.S. is a fairy tale that is not feasible.”
Apple had been working to diversify its production capabilities the past few years, and already shifted some iPhone production to India, before Trump returned to office on a platform that included aggressive tariffs against China in particular. During Apple’s quarterly earnings call with investors this month, Cook — who is generally regarded as one of the best operations experts in the world — said he expected “the majority of iPhones sold in the U.S. will have India as their country of origin.”
Cook added that he anticipated Apple would face a tariff burden of up to $900 million this current quarter. (Trump did exempt electronics, such as smartphones and computers, from his tariffs on China last month.)
Still, in spite of the exemption and slashing his tariff to at least 30% on most Chinese goods, compared to 145% earlier this month, a 10% universal tariff remains on the majority of goods entering the U.S. And about 90% of iPhone production and assembly is based in China, according to Wedbush Securities. Some of Apple’s chips are made in the United States through a partnership with TSMC, which recently opened a chipmaking plant in Arizona.
Trump, who on Friday also vowed to recommend a 50% tariff on European Union goods starting June 1, has met with Cook at least twice in recent days to press his case for more domestic manufacturing of electronics.
“Regardless of how one feels about Trump’s use of tariffs as a geopolitical bargaining chip, it is a threat the EU cannot and should not ignore,” Dirk Auer, a legal scholar at International Center for Law & Economics, said in an email.
The administration’s latest tariff statements only add to trade uncertainty that has reached historic levels and roiled markets, says Pramata CEO Praful Sakalani.
“We haven’t even begun to see the impact of countermoves by trading partners and other alliances,” Sakalani said in an email. “This highlights how companies need to uplevel their game when it comes to understanding vendor risk and exposure to changing tariff and taxation policies. It’s our belief that every company needs to do a comprehensive review of buy-side and sell-side contracts to understand where they have exposure, to systematically determine their strategy for retaining profitability and growth in this environment.”
