Apple Hasn’t Previously Been Motivated To Manufacture IPhones In The U.S

Criticizing Apple’s intention to manufacture most of its U.S.-bound iPhones in India, President Donald Trump on Friday warned of a potential 25% tariff on the device unless the company shifts production to the U.S.—a scenario that still appears unlikely in the near future, if at all.

Apple’s Deep Manufacturing Roots in China and Its Role in the US-China Trade Conflict

For decades, Apple has manufactured the majority of its devices in China, investing tens of billions in large-scale factories supported by an extensive local supplier network. This dependence on an overseas supply chain placed the tech giant squarely in the middle of Trump’s trade war with China.

In response to the escalating tensions, Apple CEO Tim Cook stated earlier this month that most iPhones sold in the U.S. between March and June would be produced in India. While Trump temporarily excluded the iPhone and other electronics from his initial tariffs in late April, Cook noted that the trade war would still cost Apple an extra $900 million during that period.

After Trump first announced his broad tariff plan in early April, analysts predicted it could raise the cost of a $1,200 China-made iPhone to $1,500. Despite the increase, experts believe that shifting production to the U.S. would push prices even higher—potentially to $2,000 or even as much as $3,500 per device.

The High Costs and Complexities Blocking Apple’s Move to U.S. Manufacturing

Apple faces several obstacles to moving production to the U.S., including a complex supply chain that CEO Tim Cook began developing in the 1990s while working under co-founder Steve Jobs, who passed away in 2011. Establishing new manufacturing facilities in the U.S. would take years and require billions in investment. When combined with current economic conditions, such a shift could triple the cost of an iPhone—potentially undermining sales of Apple’s flagship product, which brought in $201 billion in revenue during the last fiscal year.

“The idea of producing iPhones in the U.S. just isn’t feasible,” said Wedbush Securities analyst Dan Ives, echoing a common sentiment among investors closely watching Apple. He estimated that shifting production from China or India to the U.S. would push the price of an iPhone from around $1,000 to over $3,000. According to Ives, domestic manufacturing wouldn’t even be possible until at least 2028. “The price jump would be so extreme, it’s almost unimaginable,” he added.

Apple’s Tariff Negotiations and the Uncertain Future of Smartphones Amid AI Advances

In a research note released Friday, Dan Ives predicted that Tim Cook would likely engage in a “negotiation game” with President Trump to exempt the iPhone from the proposed 25% tariffs.

Planning ahead has become increasingly challenging for Apple and other tech companies due to the disruptive rise of artificial intelligence. As AI technology evolves, it could lead to a new generation of hands-free, screen-free devices that reduce the need for smartphones.

“You might not even need an iPhone in 10 years, as strange as that sounds,” Apple executive Eddy Cue remarked earlier this month during a trial concerning the U.S. Justice Department’s attempt to break up Google over alleged monopoly practices in search.

Apple did not immediately respond to a request for comment on Friday. However, during its quarterly earnings call earlier in May, Cook said the company had minimized the March quarter’s tariff impact by optimizing its supply chain. Still, he cautioned that looking beyond June is “very difficult” due to uncertainty around future tariffs.

A key concern is how long Apple can maintain its current iPhone prices if tariffs increase significantly and consumers are forced to absorb some of the added cost. Even without new tariffs, many analysts expect Apple to raise prices this fall with the release of its next iPhone lineup—possibly prompting consumers to upgrade earlier, over the summer.

Apple’s Services Revenue Shields iPhone Pricing Amid Tariff Pressures

According to Forrester Research analyst Dipanjan Chatterjee, one reason Apple has been able to hold steady on iPhone pricing is its strong profit margins from services and subscriptions tied to its devices. That segment, which brought in $96 billion during the last fiscal year, remains unaffected by Trump’s tariff threats.

“Apple can absorb some of the tariff-related cost increases without major financial strain—at least for now,” said analyst Dipanjan Chatterjee.

However, Apple is now confronting a potential drop in service revenue after a federal judge recently barred it from collecting commissions on in-app purchases processed through third-party payment systems. If Apple loses its appeal, the ruling could cost the company billions annually.

Apple’s $500B U.S. Investment Targets AI, Not iPhone Production

In an attempt to appease President Trump, Apple announced in February that it would invest $500 billion and create 20,000 U.S. jobs by 2028. However, the plan didn’t involve domestic iPhone manufacturing. Instead, the company pledged funding for a data center in Houston to support AI development—an area Apple is increasingly exploring amid an industry-wide push.

During an April 6  CBS News program appearance, U.S. Commerce Secretary Howard Lutnick claimed tariffs would drive iPhone production to the U.S., saying, “The army of millions and millions of human beings screwing in little screws to make iPhones—that’s going to come to America.”

Yet back in 2017, at a conference in China, Tim Cook cast doubt on the feasibility of that vision. He questioned whether the U.S. labor force has enough skilled workers for such highly specialized tasks.

“In the U.S., you could hold a meeting of tooling engineers and might struggle to fill the room,” Cook said. “In China, you could fill several football fields.”

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