Few Incentives Exist For Apple To Make Smartphones In U-S

The Trump administration has claimed its steep tariffs on China, now at 145%, will compel Apple to manufacture iPhones in the U.S. for the first time. However, this outcome seems improbable despite the hefty levies, given that Apple has produced most iPhones in China since their debut 18 years ago.

Relocating production to the U.S. faces significant hurdles, according to Michael Liedtke at The Chicago Tribune. Apple’s intricate supply chain, established in China since the 1990s, would require years and billions of dollars to replicate domestically. Such a move could triple iPhone prices, potentially devastating sales of Apple’s flagship product. Wedbush Securities analyst Dan Ives called U.S. iPhone production a “non-starter,” estimating that a $1,000 iPhone made in China or India could cost over $3,000 if made in the U.S., with production unlikely before 2028.

Late Friday, the administration excluded electronics, including smartphones, from current tariffs, though new levies could emerge later. Apple has not commented publicly, but CEO Tim Cook may address the issue during a May 1 analyst call. Since Trump intensified tariffs on April 2, Apple’s stock has fallen 15%, slashing its market value by $500 billion.

The big question is how long Apple might be willing to hold the line on its current prices before the tariffs’ toll on the company’s profit margins become too much to bear and consumers are asked to shoulder some of the burden.

If tariffs persist, Apple may eventually raise prices due to its heavy reliance on supply chains in China, India, and other affected regions. However, the company’s robust profit margins from its $96 billion services division, untouched by tariffs, provide some buffer to maintain current pricing temporarily, according to Forrester Research analyst Dipanjan Chatterjee.

In February, Apple announced a $500 billion U.S. investment and 20,000 jobs by 2028, focusing on a Houston AI data center rather than domestic iPhone production. White House Press Secretary Karoline Leavitt cited this pledge as evidence of Apple’s confidence in U.S. capabilities, though it sidesteps the core issue of iPhone manufacturing.